Dividends and SUVs, trucks buoy waning US auto sales

At the end of June the automakers released their 6 month sales and they were mixed. According to an article by Nick Carey and Ankit Ajmera of Reuters the SUV and truck segment had strong sales while passenger car sales continued a long running decline.

For automakers this is good news because the profits are made in trucks and SUVs. The big news was Chyrsler’s Ram truck outsold Chevy’s Silverado by more than 40,000 units.

In terms of passenger vehicles the economy, high interest rates and competition from millions of nearly new off lease vehicles combined for fewer new car sales.

The market is flat compared to the expected downturn which says sometimes about market stability.

Linking to dividend paying stocks, we all have indicators to understand how the economy is doing. For many years car sales were an easy indicator because most people drove to work and wanted 2 cars in the garage. That is changing to affordability and younger people not wanting to own, but still like to drive. Whatever indicators you use ensure they have the same meaning to the economy or you will have to find more meaningful ones as the economy chsnges.

There are more questions than answers, till the next time – to raising questions.

 

 

 

 

 

 

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