TrueCar.com Finds Some Automakers More Dependent on Economy
SANTA MONICA, Calif. — TrueCar.com analysts completed a study on Wednesday that made the correlation between new-vehicle sales and major macroeconomic indicators of a strong or weak economy.
According to the study, some automakers are more dependent on a strong economy. TrueCar.com determined that General Motors and Chrysler are consistently dependent on a solid economy for strong sales performances. Meanwhile, Hyundai and Honda were more likely to be less contingent upon the strength of the overall economy for their sales success.
Analysts said they reviewed several economic elements when comparing it to automakers' sales performances. Elements they listed were the Dow Jones Index, housing starts, unemployment and consumer confidence, with the data ranging from March of this year back to January 2007.
"With the industry starting to get its legs back, we wanted to see how dependent new-vehicle sales are on macroeconomic trends as well as which manufacturers were – and continue to be – best prepared to keep selling cars through any kind of economy," explained Jesse Toprak, vice president of industry trends and insight for TrueCar.com.
"The real revelation was the emergence of Hyundai as an ‘economy proof' manufacturer — with the lowest percentage correlation in virtually every category amongst all major manufacturers," Toprak added.
Which single macroeconomic element pushed new-vehicle sales most?
TrueCar.com reported it is housing starts at 82 percent, followed closely by the Dow Jones Index at 81 percent. Analysts indicated that the Consumer Confidence Index correlation was next on their charts at 76 percents with the unemployment rate coming in at 75 percent.
"Certainly, it is very reasonable to expect that major economic downturns and subsequent recoveries will have very noticeable anticipated impacts across all areas of our economy, including consumer automotive purchasing decisions," stated Mike Swinson, vice president of analytics for TrueCar.com.
"What might surprise some, though, is the level of correlations for some of these factors," Swinson continued.
"An 80 percent correlation is generally considered in the statistical community as a fairly strong correlation. Essentially, at these levels of correlation, between one-half to two-thirds of the proportion of variability in the macroeconomic variable data is explained just by the level of new car sales alone," he added.
Stemming from this series of data, TrueCar.com learned that GM and Chrysler were ultimately dependent on a strong economy. The site said that both automakers consistently were above the industry average in all four of the categories examined.
Analysts added that no other manufacturer made the top two in any of the categories.
"Meanwhile, Hyundai was not only far below the industry average in each category, they were the lowest by a large margin, demonstrating that Hyundai has been selling a steady amount of cars, regardless of the strength or weakness of the American economy," TrueCar.com asserted.