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Behind The Wheel

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Apr.08

11:18 AM ET

Wednesday, 8 Apr 2009

Are Car Buyers Actually Coming Back?

Posted By:Phil LeBeau

Sectors:Technology | Automobiles and Parts

Companies:Toyota Motor Corporation | General Motors Corp

As I walk around the New York Auto Show and talk with executives from GM, Toyota, and Chrysler there is one question you hear over and over: Are buyers actually coming back into showrooms?

Now, before you scoff and say, "Come on LeBeau, have you seen how dead it is at dealerships?" Keep this in mind. March sales were stronger than expected and some believe that momentum is carrying over to April.

Jim Lentz with Toyota tells me, "I think we were a little concerned when we saw the February numbers, but March actually we saw an uptick. We had anticipated another month of around 9.4 million, 9.5 million (sales rate), it came in about a 9.9 sales level. So it was a pleasant surprise for us."

Lentz and others think a few things that were pushing against the auto industry are finally starting to change. The bounce in the market has people feeling a little more confident financially. And as the government pushes to free up credit, that effort is finally trickling down and dealers are having a little easier time writing auto loans. In fact, during the last week of March, enough credit was freed up to generate better than expect sales. We are not close to where we were a year or two ago when anyone seeking a car loan could get one, but credit is not as locked up as it was late last year.

If we have seen the bottom, it couldn't come at a better time for the auto makers. Their production schedules have been gutted for the second quarter and they STILL have mounting inventories. Greater demand should help ease that backlog.

A few months back I predicted that we had seen the worst for the auto industry. Then, as the sales rate plunged under 10 million vehicles, I heard from many of you who said I was too early in the calling the bottom.

This time around, I wouldn't say we're ready for a snap back in sales, but clearly there is cautious optimism from executives trying to ride out a storm the auto industry hasn't seen for years.

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