US auto sales have been down persistently on a year-over-year basis during the past several months. March was no different, according to figures released today. WardsAuto put out a seasonally-adjusted annualized number of 16.53 million for March light vehicle sales. That’s the first sub-17 million number for cars and trucks sold since August. And this number compares unfavourably to the 17.3 million that analysts had expected.

Why this maters. When I look at historical data, I see no correlation between light vehicle sales and the business cycle. Just because auto sales have declined doesn’t mean the economy is going to follow suit. But for auto companies, this fall in sales is a significant credit risk for the auto lenders and the auto asset-backed security market.

So while declining auto sales may or may not be a harbinger of things to come in consumer credit, it is a bad sign for the stocks of auto companies, auto lenders and the value of auto ABS. And given the discounting by auto makers, the rising auto credit delinquencies and auto inventories, we should expect the pressure on these asset classes to continue.