Apparently, we're still shopping.  We're just not car shopping.

Reuters reports, "U.S. retail sales, excluding cars, were surprisingly strong in April, showing that consumers were still willing to add spending punch to the economy despite soaring food and energy prices, a government report showed Tuesday."  According to a monthly snapshot of consumer spending issued by the Department of Commerce, retail sales in the U.S. declined 0.2 percent in April -- unless you exclude auto sales.  Without cars in the picture, retail sales actually increased by 0.5 percent.

According to the Chicago Tribune, the spending downturn in April "is almost entirely due to a 2.8 percent drop in auto sales."

Auto sales slowed to their lowest point in a decade last month.  AFP reports, "Americans shunned buying gasoline-hungry SUVs last month, and opted to buy smaller cars or hybrid models with better fuel efficiency. Truck and SUV sales dived by over 17 percent."  Gasoline sales also slumped, falling 0.4 percent last month.

With consumers looking to trade in their SUVs for smaller cars, small car prices are rising.  Meanwhile, a backlog of traded-in SUVs on dealer lots has sent their resale values tumbling.

Analyst David Resler of Nomura Securities International told Thompson Financial that "the non-auto sales gains contradict the conventional wisdom that holds that high energy costs are discouraging consumer discretionary spending."

What can automakers do to turn their fortunes around?  According to the AP, two GM officials both admitted yesterday that "it's clear the U.S. auto industry is in a recession."  In a presentation to "bankers and insurance industry officials," GM Director of Global Marketing and Industry Analysis Mike DiGiovanni said the largest U.S. automaker "is shifting its marketing focus to cars from trucks."  The company is moving "to a new plan that's really going to focus on miles per gallon," DiGiovanni said.  He stressed that GM "will roll out 14 new cars and crossover vehicles in the next 18 months, but only one new truck."

Outside of the auto giants, there's one other entity that the slowing auto sales may be hurting -- state governments.  Tennessee Fox affiliate WZTV reports, "The Tennessee Department of finance says auto sales tax collections dropped every month in 2008, including 17% in April. The lost revenue is important because 10% of state sales tax revenue comes from auto sales. Those losses are one reason why Governor Bredesen proposed slashing nearly half a billion dollars out of the state budget Monday." 

Since there is apparently no one else at the dealership right now, you can actually negotiate a reasonable price on many cars at the moment.  Before you try, do your research with U.S. News car rankings and reviews

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