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Auto recovery in full bloom

U.S. auto sales have clearly bottomed, and are up 17% in the past 12 months (first chart). The shares of Ford Motor are up 650% since last year's low (second chart). Relative to their lows of late 2008, Taiwanese auto sales are up 256%, and Chinese auto production is up 150% (to cite just a few of the auto recovery stories). This is a big story with long legs. Sales fell to such low levels in 2008 that the normal ageing of the auto fleet practically demands a recovery. As the auto sector ramps up production, this will have spillover effects throughout the economy. If the past is any guide, auto sales and production are likely to be rising strongly for at least the next several years.

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