Improved Auto Sales Brighten Economic Outlook
Consumers with older cars coming off the sidelines to buy
Chrysler, Ford, Nissan and Hyundai were among the companies reporting double-digit gains from last November, which is normally a lackluster month because of colder weather, holiday distractions and a historical pattern of delaying new car purchases until after the New Year. But this past November, buyers were lured by good deals, improving confidence in the economy and the need to trade in older cars.
"Consumers are just starting to say 'it's time to start spending money again,'" said Larry Dominique, executive vice president of data for the TrueCar.com automotive website.
An early blitz of holiday advertising helped convince some people that it was a good time to buy. Ken Czubay, Ford's vice president for U.S. sales, says dealers saw the same rise in sales that other merchants did on Black Friday and the Saturday after Thanksgiving.
Several analysts expect the pace of U.S. auto sales to be the fastest in more than two years. They project the annual rate for November to range between 13.3 million and 14 million cars and trucks after carmakers finish reporting new vehicle sales Thursday. That's a far better rate than the 12.6 million through the first 10 months of the year.
Sales could even approach the 14.1 million annual pace from August of 2009, when the government offered big rebates for drivers to trade in their gas-guzzling clunkers.
Car companies expected sales to improve as people who held onto cars during the economic downturn return to the market. The average age of a car on U.S. roads is a record 10.6 years, according to Polk, an auto industry research firm. And the rate of cars that are scrapped has surpassed sales for several years.
"While unemployment and under-employment continue to dog the economy, automakers are doing everything they can to draw those with secure incomes off the sidelines," says AOL Editor-in-Chief David Kiley. "It helps that smaller, cheaper vehicles are better than ever, and attracting people who are trading down from higher prices."
Toyota's sales rose 7 percent for the month, the first time the company has seen a year-over-year increase since April when its sales began suffering because of supply interruptions due to the Japanese earthquake in March. Sales of the subcompact Yaris more than doubled. Sales of the Prius hybrids - which now include the original car as well as the new Prius V wagon - were also strong.
Chrysler Group LLC's sales rose a whopping 45 percent from a year earlier. They were led by the Jeep Compass small SUV, which had a nearly ten-fold increase in sales due in part to heavy discounting. Jeep brand sales rose 50 percent, while Chrysler brand sales nearly doubled on strong demand for its 200 and 300 sedans. Chrysler raised its incentives to nearly $3,300 per vehicle, up 6 percent from October.
At General Motors Co., buyers snapped up small cars and pickup trucks. Sales of the highly acclaimed Chevrolet Cruze compact rose 64 percent, while the Silverado pickup, GM's top-selling vehicle, saw sales jump 34 percent.
"We are seeing a broad spectrum of customers return to the market," says Don Johnson, GM's U.S. sales chief. GM's overall sales were up 7 percent.
Ford's sales rose 13 percent, fueled by the new Explorer SUV, whose sales more than tripled over last November.
The increases reflect improving consumer confidence, which rose to its highest level since July last month, according to the Conference Board.
Other automakers reporting Thursday:
- Nissan Motor Co. says sales were up 19 percent. The new Versa small car led sales with a 38 percent increase, but SUV and truck sales also rose 32 percent.
- Hyundai Motor Co. says sales rose 22 percent thanks to sales of the new Elantra, which jumped 44 percent.
- Volkswagen AG says sales were up 41 percent on the strength of the new Jetta and Passat sedans. Volkswagen sold 6,018 Passats in November, compared to 374 last November.
Associated Press contributed to this report.
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