Photographer: Kostas Tsironis/Bloomberg

Toyota, Nissan Gain Share as U.S. Market Booms a Third Month

  • Industry's best November ever extends 18 million-plus rate
  • Carmakers a bright spot in economy as Fed ponders rate boost

Automakers used early holiday-season deal making to keep U.S. sales on an unprecedented run in November, aided by a strengthened economy and cheap fuel prices that whetted buyers’ appetite for trucks.

Industrywide sales exceeded an 18 million sales rate for a record third straight month, helping enshrine 2015 as one of the best years ever for automakers. Toyota Motor Corp. and Nissan Motor Co. beat analysts’ estimates with increases of at least 3.4 percent. General Motors Co. and Ford Motor Co. posted less robust gains yet still made headway in profitable trucks.

The surge is owed in part to buyers soothed by job and wage growth, coupled with low interest rates and gasoline prices that last week were about 38 percent below the 2014 average. At the same time, carmakers are using rebates and other offers to draw shoppers to their showrooms and away from rivals.

“It’s the fight for market share and to end the year strong,” said Mark Wakefield, a managing director and head of the automotive practice for consultant AlixPartners.

Light-vehicle sales in November rose about 1.4 percent to 1.32 million, according researcher Autodata Corp., which estimated a 10 percent decline in Mercedes-Benz deliveries. The luxury unit of Daimler AG didn’t report results on Tuesday because of a computer problem. Based on that estimate, the selling pace was 18.2 million for the third straight month and the record of 17.4 million is within reach if automakers boost transactions by about 5 percent from last December.

“We will probably break the sales record for the year that was set in 2000,” said Karl Brauer, senior analyst with Kelley Blue Book Co., a vehicle pricing research firm. “There is still pent-up demand, which is the underlying force behind the strong sales, and you couldn’t turn on the radio or TV without hearing about some sales incentives.”

The carmakers are trying to build share now before a potential peak next year or in 2017, said Eric Lyman, a vice president at TrueCar Inc. Automakers spent about 6 percent more on incentives in November than they did a year earlier, according to the pricing research firm. Toyota incentives were about 14 percent higher than a year earlier, including zero-percent financing on its Camry sedan, TrueCar said.

There also are signs that cheap borrowing won’t last forever: Federal Reserve officials have signaled they will probably raise interest rates this month, ending a seven-year stint of near-zero borrowing costs. The pending increase reflects strengthening in the U.S. economy, which added 271,000 jobs in October for the biggest jump this year.

Sales Results

Two Japan-based automakers, Nissan and Toyota, benefited from the push toward light trucks. Nissan’s pickups, minivans and sport utility vehicles set a November record, including a 50 percent surge for the Rogue compact SUV. Toyota boosted sales of the RAV4 and Land Cruiser SUVs each by more than 15 percent.

Toyota rose 0.3 percent and Nissan gained as much as 1 percent as of 9:15 a.m. in Tokyo trading. The benchmark Topix index advanced 0.1 percent.

Ford and Honda Motor Co., which showed restraint on incentives last month, each lost ground to Toyota in the hotly contested small SUV market. The Toyota RAV4, usually the third-best-selling small SUV, topped both the Honda CR-V and Ford Escape last month as the company’s light-truck sales surged 9.7 percent. Honda’s total decline of 5.2 percent was a bigger drop than analysts predicted.

“That part of the market is budget-conscious because it’s dominated by millennials just getting into the market and baby boomers who are also watching their pennies,” Michelle Krebs, senior analyst with AutoTrader.com. “It does have a lot to do with incentives.”

Fiat Chrysler’s 3 percent sales gain just missed analysts’ average estimate. The Jeep brand’s sales jumped 20 percent, more than compensating for declines in the Chrysler, Dodge and Fiat brands.

GM sales rose 1.5 percent, about half the predicted increase as it cut back on sales of lower-priced cars to rental fleets to improve its profit margins. Rental-fleet deliveries fell 16 percent from the year-earlier month, while retail sales gained 4 percent. The Chevrolet brand benefited by growth in pickups and SUVs.

Ford Incentives

Ford’s biggest promotion during the month didn’t produce the desired results. The Friends & Neighbors campaign, which kicked off Nov. 3, offered as much as $2,000 on top of other deals. Ford said it’s switching to more traditional discounts for December, including zero-percent, 60-month auto loans and $1,000 cash rebates on some models.

Ford eked out just a 0.3 percent sales increase for the month, less than the 3.2 percent forecast. Even so, sales of its profitable F-Series pickups rose 10 percent, lifting the company’s stock price. The Escape was hurt by a lack of loan deals, U.S. sales chief Mark LaNeve said.

“We just didn’t have the low-interest financing that those customers are looking for, which we will have in December,” LaNeve told analysts on a conference call.

Results weren’t uniform. Sales of Volkswagen AG’s namesake brand plunged 25 percent, and its shares declined. Europe’s largest automaker stopped selling several diesel-powered vehicles after it was revealed on Sept. 18 that the company used software to evade emission tests.

Automaking remains a bright spot in manufacturing, which accounts for about 12 percent of the U.S. economy. Production of motor vehicles and parts was up 10.9 percent in October from a year earlier -- more than five times the growth in manufacturing overall -- according to the latest data from the Fed.

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