It looks that the auto industry is getting back to its heyday,
last seen before the economic recession. We see the industry
posting multiple-year-high sales for many months in 2012.
November was no exception. Auto sales in the U.S. grew 15% to
1.14 million vehicles, or 15.5 million on a seasonally adjusted
annual rate (SAAR) basis in the month driven by pent-up demand
generated from Hurricane Sandy as well as from the aging
vehicles, and improving macroeconomic conditions. This is the
five-year high sales recorded by the industry since 2007.
There were so many factors from the demand side, which fueled the
sales growth in November. Firstly, the economy shows confidence
(as home prices rise, unemployment reduces and auto financing
becomes easier) barring the dangers of forthcoming "fiscal
Secondly, the average age of vehicles has been steadily
approaching 11 years and can even go beyond, signaling further
possibilities of growth in sales of new cars. Thirdly, people in
the Northeast who postponed their purchases in October due to
Sandy or whose cars were damaged due to the storm were forced to
buy new vehicles in November.
These factors, along with the buyers' desire for more advanced
options, lifted the average sales price in the industry to the
highest level in nearly a year. According to TrueCar.com, average
vehicle price in November were $30,832, up 1.1% from last year.
November witnessed a rise in sales for practically all kinds of
vehicles, from trucks to sports utility vehicles (SUVs) and from
sedans to small cars.
Honda Motor Co.
Toyota Motor Corp.
) had the biggest sales increases during the month. Among the
Detroit automakers, Chrysler was the winner.
Let's delve into the individual automakers' sales.
Despite posting a meager 3% growth in sales to 186,505 vehicles,
General Motors Company
) saw its best November since 2007. Thanks to the double-digit
growth in sales for its Buick and Cadillac brands. But GM was not
gratified with the low sales growth, as it has a smaller exposure
in the Sandy-hit regions compared to its rivals and its
competitors such as Chrysler, Nissan Motors Co. (NSANY) and
Ford Motor Co.
) resorted to aggressive incentives to boost sales.
Ford's sales grew 6.5% to 177,673 vehicles, driven by impressive
sales growth of small compact Ford Focus (56%) and pickup truck
F-Series (18%). Most notably, the company's small-car sales shot
up 76% from November last year. Due to the encouraging sales
reports during the year, the company is looking forward to boost
its production in 2013.
Chrysler Group -- controlled by Italy's
) -- came up with its five-year high sales of 122,565 vehicles
during the month. The 14% rise in sales was mainly attributable
to its Dodge brand, which saw a 32% growth during the month. Most
notably, Dodge Journey crossover SUV sales jumped 77% in the
the long-time battle with safety-related issues seems to have had
had very little impact on the sales for Toyota. The automaker's
sales zoomed 17.2% to 161,695 vehicles, driven by burgeoning
demand for its Corolla and Camry sedans and Scion small cars. The
Camry mid-size was the top-selling vehicle during the month,
registering a 22.7% sales growth.
Honda Motor recorded a handsome 38.9% jump in sales to 116,580
vehicles buoyed by sales increases of Accord (83%), Civic (76%)
and CR-V (36%). The company's car sales surged 61% while its
truck sales rose 18% during the month.
Nissan Motors witnessed a 12.9% growth in sales to 96,197
vehicles driven by considerable rise in truck sales in both the
namesake (23.4%) and Infiniti (109.2%) divisions. Nissan division
sales went up 9.8% to 84,300 units, driven mainly by commendable
sales of its new Pathfinder SUV. Meanwhile, Infiniti saw its best
November since 1989 driven by crossovers and SUVs.
) Mercedes-Benz reported a 13.1% rise in sales to 30,315 vehicles
in the U.S. The growth was mainly attributable to a 59% increase
in sales of its E-Class sedans. The company's sales were largely
benefited from the Sandy-hit regions, which comprise a quarter of
Volkswagen rocked posting its best November sales since 1973. The
company's sales notched up 29.3% to 36,728 vehicles, driven by
impressive sales of Passat mid-size car and Tiguan SUV. Sales in
the Sandy-hit regions strongly influenced the company's overall
Hyundai Motor Co.
) and its affiliate Kia Motors Corp did exceptionally well in
November despite their battle with the U.S. Environmental
Protection Agency regarding its false advertising scandal about
fuel efficiency in some models. Hyundai's sales rose 8% to 53,487
cars while Kia's sales escalated 10.9% to 41,055 cars. However,
only 10% of Hyundai's U.S. customers were aware of the scandal
despite the publicity, according to a study.
Is the Worst Over?
2012 is definitely going to end on a higher note. McNeil, GM's
vice president of U.S. sales operations, stated that industry
sales will reach the upper-end of its forecasted range of 14
million-14.5 million units (on a SAAR basis) driven by the growth
drivers such as pent-up demand and improved consumer confidence.
With this, 2012 would be a remarkable year since 2007 when
industry sales clocked at 16.1 million units (on a SAAR basis).
Despite relentless optimism, the looming consequences of
impending "fiscal cliff" are difficult to avoid. Most say that a
sharp reduction in federal spending and rise in taxes could
possibly tip the economy back into recession unless Congress and
the White House reach a deal to cut the budget deficit. As a
result, many automakers stayed away from making any 2013
Whatever the authorities decide to resolve the fiasco, we expect
an uptrend as automakers brace themselves for the worst and
further focuses on all the bright spots the industry has
experienced so far this year.
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