Hurricane Sandy Boosts Car Sales In November
Automakers are throwing around rebate money, too, making December a good month to buy
November was the strongest month of sales since January 2008, nine months before the financial collapse that sunk the economy, according to AutoData. The auto industry began feeling the effects of the recession long before the rest of the economy. More than 1.09 million cars were sold in November, up from 1.02 million a year ago.
That puts sales at a seasonally adjusted annualized rate (the figure automakers look at to compare month-to-month sales, which tend to fluctuate with the weather) at 15.54 million, compared with 13.55 million last November.
Auto loans are easier to get now too. Credit clearing house Experian recently reported that sub-prime lending in the auto category was about 43% of loans, up from 42% in 2008 when such lending peaked before the financial crisis. Underwriting, such as income verification, has stiffened since then. Finance companies, though, have loosened lending for those with low credit scores, but who have solid incomes.
But automakers warned that talks of the "fiscal cliff" could put a damper on the party, if Congress and the White House can't reach an agreement. The "fiscal cliff" term refers to the tax increases and government spending cuts set to roll into effect starting Jan. 1 if the government can't come to an agreement to cut the deficit.
"Exactly how much growth we can expect next year will depend on how Congress and the president resolve the fiscal cliff issue," said Kurt McNeil, General Motor's head of U.S. sales. "Markets and consumers hate uncertainty."
Ford estimated that about 20,000 to 30,000 of this month's sales came from customers who planned to buy cars in October but delayed them until November due to the hurricane. Hurricane victims who need to replace their wheels could drive demand for another several months.
"We are expecting a strong December as the industry continues to recover from the East Coast hurricane," said Reid Bigland, CEO of Chrysler's Dodge brand and head of U.S. sales for the group, in a press release.
Honda's sales rocketed up 38.9 percent, thanks in large part to steep incentives offered on the 2012 Honda Civic. The company released a redesigned version of the popular, yet critically maligned, Civic on Nov. 29th, and dealers were pushing the old version out the door with cash rebates. And the popularity of the new Honda Accord helped.
Edmunds.com Senior Analyst Jessica Caldwell said hurricane recovery also played a role in Honda's great November numbers.
"Honda is the most popular brand in the tri-state area (on the East Coast) so when life started to return to normal, those car buyers quickly made up for lost time," she said. "It was certainly a major factor."
On the flip side, GM posted a mere 3 percent increase for the month, leaving a huge inventory of unsold trucks on dealer lots.
GM's biggest brand, Chevrolet, reported flat sales over last year despite new products like the Spark minicar. Silverado pickup sales fell 10 percent.
GM's sales have been trailing the industry all year. They were up 4 percent through October, compared to the industry-wide increase of 14 percent.
GM said its competitors resorted to higher than usual incentives last month to get rid of 2012 model-year trucks. GM, which had more 2013 trucks on its lots, was only offering an average of $500 per truck, or a third of what others were offering. GM has been trying to hold the line on costly incentives, which can hurt resale value and brand image.
"We want to be known for great products, not great incentives," McNeil said.
But some analysts think GM will be forced to offer more deals in December to clear out higher-than-forecast inventory.
Asian brands also got a boost from some unusually big discounts, said Jesse Toprak, senior analyst for automotive pricing site TrueCar.com. TrueCar estimated that Hyundai and Kia, which were admonished by the U.S. government in late October for overstating gas mileage, increased incentive spending by nearly 30 percent. Nissan spending was up 45 percent to $4,273 per vehicle, by far the highest incentives in the industry.
The Associated Press contributed to this story.
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