The Pickup Truck Indicator: The Recovery is Real

In October, overall vehicle sales increased by 13.4% compared to October 2009, but that increase was largely because light truck sales increased by 23.5%, more than six times the 3.9% increase in passenger car sales.  Year-to-date, truck sales are up by 16.7%, more than three times the 5.3% increase in passenger car sales so far this year.

What does that signal? The economic recovery is real.  Here's some background: 

AutoNation Chairman and CEO Mike Jackson (featured on a CD post in June): "I've always said, when you want to know when this economy is going to turn, just watch the pickup sales.  All those sales are small businesses and entrepreneurs, and when they see the prospect for better business, they're going to go out and finally buy a new pickup truck. So this is a key indicator of what's going on in the U.S. economy.  This is small business America saying that the worst is over, I see opportunities in the future, I feel confident enough to go out and buy a new truck.    

Pickup trucks are bought by small business entrepreneurs who have their finger on the pulse of the U.S. economy. It's an expression of confidence in future of economy. They don't buy until they see the prospects for business are brighter."

From an AP story yesterday:

"Trucks outsold cars by the highest margin in nearly five years in October, a sign the economy may be starting to improve. These trucks aren't the tractor-trailers that haul freight. They're pickups, SUVs, minivans and smaller SUVs. The category — known as light-duty trucks — made up 54 percent of all new U.S. vehicle sales last month, compared with 46 percent for cars, according to industry tracker J.D. Power and Associates. 

It's the biggest difference since December 2005, when trucks accounted for 56 percent of sales. Strong truck sales make economists giddy because they mean people are willing to spend money again. Small business owners feel comfortable enough to buy a new pickup truck or delivery van for their company; and regular folks are confident enough in their jobs and finances to take on beefy SUV payments."

HT: John Jarrard.