General Motors Co. and Chrysler Group LLC gains led November U.S. auto sales that accelerated to the fastest pace in more than five years as dealers stepped up promotion of year-end offers to try to control rising inventory.
Deliveries of cars and light trucks rose 16 percent for Chrysler, 14 percent for GM and more than 10 percent for Toyota Motor Corp. and Nissan Motor Co. The carmakers led a rise in the industry’s monthly annualized industry sales rate, adjusted for seasonal trends, to 16.4 million, the highest since February 2007, according to researcher Autodata Corp.
Automakers entered a year-end sales push last month with their biggest supply of cars and trucks in eight years, a buildup that was poised to test the industry’s newfound pricing discipline. Dealers introduced more aggressive year-end marketing campaigns than in past years to try to draw shoppers to showrooms with Black Friday promotions and cheap financing.
“Dealers were seeing the opportunity to piggyback on this shopping phenomenon,” said Dave Winslow, chief digital strategist at Dealer.com, which provides digital advertising and marketing services. “When you compound that with the high inventory levels, it’s a good opportunity for them to really reduce those in the final few weeks of the year.”
GM and Chrysler sales met or beat analysts’ average estimates for increases of 14 percent and 11 percent, respectively, in a survey by Bloomberg News. Deliveries increased 11 percent for Nissan and 10 percent for Toyota City, Japan-based Toyota, topping average estimates of 3.1 percent and 6.5 percent.
Sales climbed 7.1 percent for Ford Motor Co. and affiliates Hyundai Motor Co. and Kia Motors Corp.’s combined deliveries rose 7.3 percent. Both outpaced analysts’ average estimates for a 5.6 percent gain for Ford and a 1.9 percent drop for Seoul-based Hyundai and Kia.
U.S. car and light truck sales in November increased 8.9 percent to almost 1.25 million, exceeding analysts’ average estimate for a 5.2 percent gain in the survey by Bloomberg News. The monthly results automakers reported today include deliveries tallied through Dec. 2, helping boost the number of vehicles sold, because the month ended over the weekend.
The industry sales rate topped analysts’ average estimate of 15.8 million, up from 15.3 million a year earlier.
While promotional activity revved up during November, actual discounts failed to put a dent in strong industrywide pricing, analysts said. Data providers Edmunds.com said the top six automaker’s average incentive spending per model was little changed from a year earlier, and LMC Automotive said the average price that buyers paid for new vehicles rose $461 to $30,079 through the first half of the month.
Automakers in the U.S. have largely refrained from excessive discounts since the restructurings of Chrysler and Detroit-based GM. Incentives per vehicle through October averaged $2,552, according to Woodcliff Lake, New Jersey-based Autodata, less than the $2,776 average promotion in 2009, the year those two companies went through bankruptcy.
Black Friday ranked as one of Chrysler’s top-five sales days of the year, Ralph Kisiel, a spokesman, said in an e-mail. Deliveries of the new Jeep Cherokee climbed to 10,169 in just its second month in the market, helping the Auburn Hills, Michigan-based company extend its streak of year-over-year sales gains to 44 consecutive months. Sales of the Ram pickup gained 22 percent to 29,635.
Toyota promoted no-interest loans for 60 months on its Camry sedan, while Yokohama, Japan-based Nissan advertised a $179-a-month lease payment for its Altima sedan.
“The auto industry is really very much influenced by being able to offer zero-percent financing, and car dealers also are beneficiaries of low rates,” Maryann Keller, principal at auto-industry consulting firm Maryann Keller & Associates in Stamford, Connecticut, said today on Bloomberg Radio. “They’re carrying excess inventory because floorplan for them -- the inventory carrying costs -- are so low.”
Deliveries may rise to 16.1 million next year, the average estimate of analysts in a survey by Bloomberg News in September. While that would be the smallest annual increase since its rebound from a 27-year low for sales in 2009, it would extend the industry’s streak of gains to five years for just the second time since World War II.
Carmakers have accelerated production to meet demand that has left the industry on pace for the best sales year since 2007. Inventory climbed to almost 3.4 million cars and light trucks entering November, according to industry data provider WardsAuto. At 76 days supply, that was the highest for the month since 2005.
At the end of November, GM and Chrysler’s inventory swelled sequentially to 96 days and 91 days, and Ford’s expanded from a year earlier to 89 days.
Ford forecast today that its North American production will slip 1.8 percent in next year’s first quarter to 770,000 vehicles. Its projection for fourth-quarter output of 770,000 vehicles is unchanged, according to a statement released by the Dearborn, Michigan-based company.
Rising inventory raised the stakes for sales in November after deliveries missed estimates in October and slipped in September for the first time in 27 months. If buyers don’t absorb enough car and truck supply, more automakers may need to follow Ford in trimming output or resort to margin-slicing discounts.
To keep inventory in check, Ford has chosen the route preferred by analysts such as RBC Capital Markets’ Joe Spak by scheduling two weeks of downtime for its plant that builds the Focus compact and C-Max hybrid late this year. The automaker also is taking about one week off at a Fusion sedan factory this month to trim inventory.
Fusion deliveries climbed 51 percent in November to 22,839, while demand for Focus slipped 17 percent to 15,239 and C-Max plunged 51 percent to 2,398.
Toyota and Honda Motor Co. may need to follow Ford’s lead by trimming output of their Camry and Accord sedans and RAV4 and CR-V utility vehicles, Spak wrote in a Nov. 7 report. Deliveries slipped 0.1 percent for Tokyo-based Honda last month, missing analysts’ average estimate for a 0.5 percent gain.
Volkswagen AG reported a 9.1 percent drop in combined November sales for the Wolfsburg, Germany-based company’s VW and Audi brands, a smaller decline than three analysts’ average estimate of 10 percent. VW brand sales fell 16 percent, the company said in an e-mail.
“As the holiday season builds up, we see some super aggressive activity in the marketplace,” Jonathan Browning, head of VW’s U.S. operations, told reporters today on a conference call. “Clearly it’s something that needs to be managed and every manufacturer has its part in terms of playing responsibly in the marketplace.”