US auto sales up to Jan '08 levels
Industry news / 04 Dec '12, 12:37am
US auto sales have posted their highest levels since January 2008 amid an improving economic outlook and demand for replacement vehicles following the devastating Hurricane Sandy.
Total industry sales in November were up 15 percent from a year earlier and came in at an adjusted, annualised rate of 15.5 million vehicles.
Wrecked cars under piles of debris in Queens, New York, in the aftermath of Hurricane Sandy. Analysts say as many as 90 000 cars will have to be replaced the epic storm. Credit: REUTERS
Honda led the pack with a 39 percent gain that drove its best November results yet, while Chrysler, Ford and GM managed to post their best Novembers in years with more modest but still solid growth.
Still, some expressed concerns the auto industry's strong recovery from the financial crisis of late 2008 could be hampered by the looming 'fiscal cliff' with Washington at a political impasse over addressing the budget deficit.
GM sales chief Kurt McNeil said: “Exactly how much growth we can expect next year will depend in part on how Congress and the president resolve the issue.
“Consumers hate uncertainty, so an agreement on ways to reduce long-term federal budget deficits could remove an impediment to growth.”
GM could lose some sales to government fleets as a result of budget cutbacks, but McNeil said the bigger concern was the impact on businesses and consumers.
Most economists fear the fragile US economy could dip back into recession if Republicans and Democrats fail to reach a deal and mandatory tax increases and massive budget cuts are triggered.
Ford said the political fight had had a limited impact on auto sales so far.
Head of Ford sales Ken Czubay commented: “It's on the front page of every newspaper but when you take the other side of the story - the aging fleet, the value proposition, and low interest rates - the overall spirit of consumers going into the showroom shows that business is still going to be quite good.”
Ford estimated that November's sales saw a boost of 20 000 to 30 000 vehicles as a result of Hurricane Sandy. Economist Jenny Lin forecast that the storm would continue to drive sales in December and January as much of that gain was from sales delayed by the storm and thousands of damaged vehicles still need to be replaced.
“We do think this is an industry that is growing stronger even without the Sandy effect.”
Ford posted its best November since 2005, as sales rose six percent to 177 673 vehicles. The results were driven by strong demand for its small cars, which posted their best November in 12 years.
Toyota sales were up 17 percent at 161 695 vehicles
Bill Fay, manager of the group's Toyota Division, said: “Replacement of vehicles damaged or destroyed by Hurricane Sandy is partially responsible for strong sales.
“However, pent up demand, record low finance rates and exciting new products are also driving demand.”
Chrysler sales grew by 14 percent to 122 565 vehicles for the best November performance since 2007.
It has now posted 32 consecutive months of sales gains and its sales are up 22 percent for the year to date.
Sales chief Reid Bigland said: “Chrysler is well positioned for a strong sales finish to the year.
“We are expecting a strong December as the industry continues to recover from the East Coast hurricane and consumers continue to respond to our popular year-end Big Finish event.”
Honda also expressed hope for the future as it celebrated record November sales of 116 580 units which helped push its sales for the year to date up 24 percent.
John Mendel, head of sales at American Honda, said: “We are now surpassing sales records set pre-recession, a true sign that our business has recovered.
“We're ready for a strong finish to 2012.”
GM sales rose by a modest three percent to 186 505 vehicles but it remains the company’s best November performance since 2007.
The largest US automaker said one reason it fell behind is because its competitors have a larger presence in the East Coast and were able to reap more gains from the post-hurricane recovery efforts.
It also cited the costly incentives its rivals were offering customers and noted that its average transaction price is among the best in the industry as its market share fell to 16.3 percent from 18.1 percent in November 2011.