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Trading  | January 3, 2018

2017 was a volatile year for auto sales…to say the least.  The year began with a multi-year, record-high run-rate SAAR of 18.3 million units but sales steadily declined month after month and reached an anemic 16.0 million annual pace by August. Alas, when all hope was lost and the auto industry looked destined to succumb to the negative side effects of its endless channel stuffing, reckless incentive spending and deteriorating lending standards, Hurricane Harvey struck Southern Texas and wiped out hundreds of thousands of cars just in time to save the Detroit OEMs from themselves (we wrote all about it here: Hurricane Harvey Surge-Nado: Auto SAAR Soars To 30-Year High On Hurricane Replacements). 

Of course, after a strong September, in the wake of Hurricane Harvey replacements, it looked as if the steady decline experienced earlier in the year had returned in October and November.  But, then December once again bucked the downward spiral with a SAAR print of 18.2 million (per GM), well above the 17.5 million estimate from Ward’s.

Here’s a look at how it all played out:


As Stone McCarthy points out, strong December sales came courtesy of beats at GM and Ford, partially offset by misses at Honda and Nissan.

The Detroit Three, which consist of Chrysler, Ford and General Motors, have made their December sales available. Both domestic car and light truck sales are coming in above expectations so far, mostly due to particularly strong General Motors sales. Given their sales figures, domestic light vehicle sales for December look to be at about 13.8 million units, versus the 13.4 million selling pace of November.

General Motors saw a 34.0% yearly decline in domestic car sales, even larger than we expected. However, this was offset by an even larger gain in light truck sales, up 5.6% from last December.

Ford domestic car sales also came in significantly below our expectations, and were down 5.5% y/y. Ford domestic light truck sales, on the other hand, saw an even larger increase than we had been looking for, and were up 6.1%.

Chrysler sales came in significantly closer to our expectations for both cars and light trucks. Chrysler domestic car sales were down 17.9% y/y, and Chrysler light truck sales were down 7.7% y/y.


Of course, keeping with recent trends, auto consumers continued to shun smaller, more fuel efficient cars, down 9% YoY…


in favor of gas guzzling, and way more profitable, trucks and SUVs which were only down 2.3% YoY.


Not surprisingly, the better than expected sales during the month were helped along in no small part by a surge in incentive spending at General Motors.  Per the company’s monthly sales filing, GM provided customers an average discount of 14.8% in December on a $38,000 average selling price, or roughly $5,600 per vehicle sold.  Compared to last year, that’s a full $1,000 increase per unit, or a 19% increase in incentives per vehicle sold.

GM’s average transaction prices (ATPs), which are net of incentive spending estimates, were more than $35,400 for the year and they surpassed $38,000 in December. Both are records, and significantly above the industry average of $31,600 for the calendar year.

GM’s incentives as a percentage of ATP in the fourth quarter of 2017 averaged 13.3 percent, in line with the fourth quarter of 2016, according to J.D. Power PIN estimates. GM incentives during the month of December averaged 14.8 percent.

Of course, the surge in discounts helped GM further address its inventory crisis in December…even it means they likely made no money during the month…


…oh well, it’s not as if investors care about profits anyway…


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