TrueCar.com Links Auto Sales to Economic Indicators

SANTA MONICA, Calif., April 14 /PRNewswire/ -- In a recent study that looked at the correlation between new vehicle sales and major macroeconomic indicators, TrueCar, Inc. (www.truecar.com), the leader in new car pricing data, was able to isolate which auto manufacturers were reliant on a positive economy and which are not.  These correlations, which looked at the Dow Jones Index, Housing Starts, Unemployment and Consumer Confidence, indicate that GM and Chrysler are consistently dependant on a solid economy, while Hyundai and Honda were more likely to be less contingent upon the strength of the overall economy for their sales success.

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"With the industry starting to get its legs back, we wanted to see how dependent new vehicle sales are on macro-economic trends as well as which manufacturers were – and continue to be – best prepared to keep selling cars through any kind of economy," said Jesse Toprak, VP 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."

The study – which examined data dating back to January 2007 – was designed to find out the correlation between some of the most commonly followed macro-economic trends and new vehicle sales in the U.S.  Total industry sales were highly correlated with all of the indices TrueCar tracked:  the strongest correlation for the overall industry was with Housing Starts at 82% followed very closely by Dow Jones Index at 81%. Consumer Confidence Index correlation was also high at 76%, along with the inverse correlation of 75% for the unemployment rate.  

"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," added Mike Swinson, PhD – VP of Analytics for TrueCar.  "What might surprise some, though, is the level of correlations for some of these factors.  An 80% 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 macro-economic variable data is explained just by the level of new car sales alone."

From this series of models, TrueCar was able to learn that GM and Chrysler were ultimately very dependent on a strong economy.  They were both consistently above the industry average in all four of the categories examined, while 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.  

The entire report can be viewed online at blog.TrueCar.com.

NB: This study was conducted in April 2010 and featured data from January 2007 through March 2010, except Housing Starts to Sales, which encompasses January 2007 to February 2010.

About TrueCar

TrueCar is the authority in new car prices.  We show car buyers and car dealers how much people actually paid for a particular car in a specific local area.  With TrueCar pricing, both new car buyers and new car dealers can know at any time what is considered a good or great price on a new car. Consumers no longer need to walk into a dealership partially informed and fully suspicious – using TrueCar they walk in knowing the price of a fair deal. Dealers benefit by TrueCar's real-time, unbiased information about marketplace pricing, helping them price cars for increased sales, and ultimately gaining market share over other dealers.  Our innovative new car pricing service is offered free of charge on our website at www.truecar.com, on our mobile site at mobile.truecar.com, and via syndication of our tools and pricing data to leading automotive research sites throughout the web. 

About TrueCar Data

TrueCar obtains data directly from car dealers, respected dealer management system (DMS) providers, and well-known data aggregators within the automotive space. We also acquire vehicle configuration data, customer and dealer incentives data, financing and loan data, vehicle registration and insurance data, and much, much more.  TrueCar is insatiable about data with our goal to find 100% of all purchase transactions, even if that means finding the same transaction multiple times from multiple sources within the car-buying ecosystem.  Our data is among the most timely and comprehensive in the industry, as we are able to process most car sales within a week of the actual sales date, and have a substantial fraction on the site within 48 hours of the actual sale.  TrueCar believes the greater our informational accuracy, the greater benefit we provide to both dealers and consumers.

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Jesse Toprak

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SOURCE TrueCar.com