Did New Cars Sales Bottom in November?

Read the following article….

Yes, car sales look terrible for December. But that’s if you compare sales to the same month a year ago. The market has changed so much from then that I would argue you can’t get an accurate read on what’s going on right now, if you’re only measuring today’s sales against 12 months ago. A better gauge is a running average over the last 6 months. Car sales are in a terrible state, but the bottom may actually have been reached in November. In fact, sales were up by nearly 150,000 units or nearly 20% in December vs. November.

January could be better. GM and Chrysler received the first installments on their bridge loans, which instilled some level of confidence in the market. GMAC received TARP money which will help stabilize quite a number of dealers. GM immediately began offering low interest loans and resuming national television advertising.

That’s not to say the market is on a rebound. But it may well be that we hit the low point two months ago and are starting to inch up

So, for my investment in AutoNation (AN) and Berkshire’s (BRK.A) Warren Buffett’s in CarMax (KMX) this means the 10,000 year flood may have crested and may be receding. What is left? Over a thousand fewer dealers, pent up demand and and TARP backed loans from the automakers.

Of course it is early to tell if this is a one month anomaly or a trend but this is certain, it is the first sign of good news in some time.

AutoNation CEO Mike Jackson will update investors at the end of the month when earnings are released. Expect earnings to be dismal, what is important is what he says about the current environment and what he sees going forward..

Disclosure (“none” means no position):Long AN, None
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