By Jeff Bennett
Auto makers could report their highest November U.S. sales in
more than a decade after new-car shoppers feasted on early Black
Friday promotions and cheap gasoline prices that are driving buyers
to heavier vehicles.
Dealers were estimated to sell between 1.27 million and 1.29
million new vehicles during the month--a number that would be the
strongest since November 2001, when a barrage of post-9/11 sales
incentives pushed up demand. Thirteen years later, the auto
industry is sizzling even as broader consumer spending is showing
signs of fatigue.
November's annualized adjusted selling rate is expected to flirt
with 17 million vehicles, a mark last topped in August. Americans
appear hungry for car deals, and auto makers--raking in profits
after a deep industry restructuring and amid solid demand for
trucks and sport-utility vehicles--have been dishing out rebates,
discounts and cheap lease agreements.
"Black Friday has established itself as the start of the final
epic selling season of the year, and this year it has started
earlier than ever," said John Krafcik, president of online
car-shopping site TrueCar Inc., referring to the sales bonanza the
day after Thanksgiving. "Hard-hitting sales events, great new
products and receptive consumers are driving the 17-million
forecast."
Some of the deals that wrapped up on Sunday included Honda Motor
Co. offering its 2014 Accord for $240 a month for three years with
nothing due at signing. General Motors Co. is handing out
zero-percent financing for three years on its 2014 Chevrolet
Impala, plus a $1,000 bonus. Chrysler Group LLC is offering as much
as $7,250 cash back on the 300 sedan and $2,500 off the Dodge
Charger.
Some dealers were also sweetening the offer with a free
television set and Apple Inc. iPad tablet computer with any vehicle
purchase. Daimler AG's Mercedes-Benz luxury brand is providing
$2,000 cash back on certain models.
Meanwhile, U.S. consumers aren't just buying, they are buying
big.
A half decade ago, buyers responded to a recession and high
gasoline prices by purchasing smaller cars that achieved better
fuel economy but delivered lower margins. With gasoline now under
$3 a gallon, those buyers are trading up and increasingly opting
for SUVs and pickups.
Truck and SUV sales are expected to account for 52% of the
vehicles sold this year through November, up from 47% of the
vehicles purchased in 2009, according to Barclays Equity
Research.
Most customers also bought their vehicles with all the
trimmings, including infotainment offerings and heated and
all-leather seats. Those extras mean even better profit margins for
car companies.
The falling U.S. unemployment rate, which reached a five-year
low of 5.8% in October, continues to be a strong factor as does
consumer sentiment, which is at a seven-year high, according to
industry tracker WardsAuto.com.
Chrysler is expected to be November's big winner, with
year-over-year sales jumping by as much as 20%. That double-digit
percentage increase compares with a 4% average gain for the
industry as a whole in November. General Motors Co. is expected to
report a 1.4% year-over-year sales increase, while Ford Motor Co.
is projected to slip less than 1% as production of its F-150 pickup
switches to a new aluminum truck body.
Much of the focus on sales-reporting day, which is scheduled for
Tuesday, will be on whether the industry is plateauing after a
string of robust annual growth rates. Sales are expected to finish
this year at 16.4 million vehicles and then come in between 16.5
million and 17 million over the next three years. That is healthy
by any historical standard, but auto makers will be pressured to
keep production in check and not resort to piling on incentives to
artificially support demand.
The Week Ahead looks at coming corporate events.
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