Better economy, storm delays lift US auto sales
DETROIT — A better economy and havoc from Superstorm Sandy kept auto sales brisk in November.
Signs of a healthier U.S. economy and purchases postponed by Sandy pushed up sales for major automakers last month. Chrysler, Nissan and Hyundai reported strong Bemand on everything from small SUVs to sedans on Monday.
Americans are more confident about the economy than they’ve been in a while: Home values are rising, hiring is up and interest rates remain low. And that means people are willing to make big purchases.
Superstorm Sandy, which hit at the end of October, forced buyers in the Northeast to postpone purchases until November. Also, people whose cars were damaged by the storm are starting to replace them. And because the average age of a vehicle on U.S. roads is approaching 11 years, people are being forced to make costly repairs or buy a new car or truck.
“Everything is kind of moving along almost in concert now,” says Jeff Schuster, senior vice president of forecasting for LMC Automotive, a Detroit-area industry consulting firm.
November sales, when calculated on an annual basis, are likely to be 15 million or more, the highest rate since March of 2008, according to LMC. That’s above the 14.3 million annual rate so far this year, even though November is normally a lackluster month due to cold weather and holiday anticipation.
If sales end up at 15 million for the year, it would be a vast improvement over the 10.4 million during the recession in 2009. Sales would still fall short of the recent peak of around 17 million in 2005.
Chrysler’s U.S. sales rose 14 percent last month from a year earlier, the company said Monday. Hyundai sales rose 8 percent from November of 2011, and Nissan sales were up 13 percent.
Chrysler results were led by the Dodge brand, which saw sales rise 32 percent. The company says it sold 123,000 vehicles. Dodge Journey crossover SUV sales rose 77 percent.
South Korea’s Hyundai reported sales of just over 53,000 for the month, led by the Sonata midsize car and the Elantra compact. Nissan said it sold more than 96,000 vehicles for the month, with a 41 percent increase at the Infiniti luxury brand.
Foreign-based brands like Hyundai should see the biggest sales increases in November due to big discounts, says Jesse Toprak, senior analyst for automotive pricing site TrueCar.com. TrueCar estimates 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, while Toyota spending rose 9 percent from a year earlier.
Most analysts say they are seeing little sales impact from the “fiscal cliff” negotiations between Congress and the White House. The term refers to sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit. Economists say that those measures, if implemented, could push the U.S. economy back into a recession.
Schuster says the fiscal cliff and a possible recession are among the risks that could derail the auto sales recovery next year.