Storm delays lift already strong US auto sales
By DEE-ANN DURBIN and TOM KRISHER
The Associated Press | December 04,2012
A Toyota dealership sign glows over a car lot in Tustin Calif., recently. A better economy and extra demand after Superstorm Sandy lifted U.S. auto sales in November.
DETROIT — Superstorm Sandy gave an extra boost to already strong U.S. auto sales last month, although carmakers warned that uncertainty over the “fiscal cliff” could undo some of those gains.
Most major companies, from Toyota to Chrysler, posted impressive increases from a year earlier. Only General Motors was left struggling to explain its 3-percent sales gain and large inventory of unsold trucks.
Americans were already willing to buy a new car or truck last month because they’re more confident in the economy. Home values are rising, hiring is up and auto financing is readily available. Also, the average age of a vehicle on U.S. roads is approaching a record 11 years, so many people are looking to replace older cars.
Sandy just boosted that demand. The storm added 20,000 to 30,000 sales industry wide in November, mostly from people who planned to buy cars during the October storm but had to delay their purchases, Ford estimated. People who need to replace storm-damaged vehicles are expected to drive sales for several more months. GM estimates that 50,000 to 100,000 vehicles will eventually need to be replaced.
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 Automotive, a Detroit-area consulting firm. That’s higher than 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. Both GM and Chrysler predicted November sales would run at an annual rate of 15.3 million.
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.
But the ongoing “fiscal cliff” negotiations between Congress and the White House could still derail the industry’s recovery. 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.
“Exactly how much growth we can expect next year will depend in part on how Congress and the president resolve the fiscal cliff issue,” said Kurt McNeil, GM’s U.S. sales chief. “Markets and consumers hate uncertainty.”
McNeil and other GM executives tried to explain the automaker’s disappointing performance. 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.
Toyota said its 17-percent sales increase was partly due to post-Sandy demand. Honda was up 39 percent thanks to strong sales of the new Accord sedan and clearance deals on the outgoing Civic, which was replaced by a new 2013 Civic at the end of the month.
Luxury cars saw their usual yearend surge as holiday commercials started crowding the airwaves. Porsche’s sales rose 71 percent to 3,865, a record month for the automaker. Infiniti, Acura, BMW and Lexus all reported big gains.
Edmunds.com analyst Jessica Caldwell said luxury brands have historically targeted their customers at this time of year because of holiday bonuses. That’s no longer a driving factor, she said, but it’s still a good time of year for people to buy 2012 model-year luxury vehicles because dealers are trying to clear them out.