Photographer: Daniel Acker/Bloomberg

Automakers Top November Sales Estimates With Holiday Dealmaking

  • U.S. sales rise 3.7%; Ford shares surge on light-truck demand
  • GM, Toyota, Nissan also top forecast; Fiat Chrysler sales drop

Automakers who fretted about November’s slow start during a divisive election used Black Friday discounts and other deals to turn around their fortunes, with most beating sales forecasts handily and keeping 2016 within reach of another record year.

Ford was the biggest beneficiary, with its stock jumping after it posted a 5.1 percent sales increase that far exceeded the average estimate. General Motors Co.’s 10 percent sales gain was aided by incentives topping $10,000 on some Silverado pickups and Suburban SUVs. Even the scandal-tarnished Volkswagen brand got a holiday bonus: Its deliveries rose for the first time in more than a year.

Auto sales are running at near-record levels as the U.S. economy continues to expand with little inflation and with relatively low gasoline prices spurring demand for pickups and SUVs. Total light-vehicle sales rose 3.7 percent to 1.38 million, a record for November, researcher Autodata Corp. reported. The month’s annual sales rate, adjusted for two extra selling days this November, was 17.9 million vehicles -- more than the 17.7 million average estimate .

The industry is on track to set another annual gain this year -- a record seventh straight -- as long as December sales come in with no more than a 2 percent decline. Last year’s total was a record 17.47 million light vehicles.

“All economic indicators show significantly improved optimism about the U.S. economy,” Mustafa Mohatarem, GM’s chief economist, said in a statement. “We believe the U.S. auto industry is well-positioned for sales to continue at or near record levels into 2017.”

Holiday Deals

Once the airwaves were clear of political advertising after the Nov. 8 elections, automakers added discounts and had better luck getting their messages out to buyers. GM dangled 20 percent discounts nationwide on its Chevrolet, GMC and Buick brands in November, and makers of luxury autos revived annual promotions such as “the Season of Audi” and Lexus’s “December to Remember.”

“We got off to a very slow start,” said Randy Parker, vice president of Nissan Motor Co.’s Infiniti Americas unit. “With election jitters, people had delayed big purchases. So there was a nice pop on Black Friday weekend; we rebounded.”

Ford recorded the best November sales for its F-Series pickups since 2001. The Dearborn, Michigan-based company’s shares rose 4.1 percent to $12.45 at 3:45 p.m. after earlier climbing as much as 7 percent in the biggest intraday gain since October 2012. GM rose 5.4 percent to $36.39.

The results weren’t uniform. Fiat Chrysler Automobiles NV, with a rare stumble in Jeep sales, posted a decline that was bigger than predicted. The company dialed back pickup incentives after model-year closeout sales in September and October on top of the discontinuation of the Chrysler 200 and Dodge Dart car models.

For most automakers, light-truck demand fueled sales:

  • Ford saw a 19 percent gain in SUV deliveries and an 11 percent increase for F-Series pickups. Car sales plunged 9.7 percent.
  • GM’s Cadillac Escalade sales jumped 25 percent and Chevrolet Tahoe deliveries surged by 31 percent.
  • Fiat Chrysler’s sales dropped 14 percent as Jeep brand sales fell, led by a plunge in Cherokee deliveries. A bright spot was a jump for Ram brand pickups and work vans.
  • Nissan’s Rogue compact crossover rose 18 percent and accounted for almost half of the brand’s light-truck sales in November.
  • Toyota Motor Corp. benefited from the SUV boom with Highlander sales soaring 67 percent. Corolla sales topped both the midsize Camry and the RAV4 crossover.
  • Honda Motor Co.’s 6.5 percent gain trailed the 8.4 percent average estimate. The results were hurt by a decline at its car-heavy Acura luxury line.
  • Volkswagen brand deliveries jumped 24 percent, the first increase since October 2015, with Passat sales more than doubling.

Many of the automakers’ deals pegged to Black Friday actually ran all through November and some stick around the rest of the year.

GM’s full-size pickup incentives through Nov. 20 jumped 46 percent from a year earlier to $5,753, according to data from researcher J.D. Power obtained by Bloomberg, compared with Ford’s $4,467, a 5 percent increase, and Fiat Chrysler’s Ram at $6,062, up 19 percent.

Incentives are now at a level where they can’t really spur much more demand without stronger GDP growth, said Jeff Schuster of LMC Automotive. That scenario is looking likely after this week’s upward revision to third-quarter economic growth and optimism about a tax cuts and deregulation under Donald Trump’s presidency, he said.

“The incentives are being used to manage the plateauing” in U.S. auto sales, Schuster said.
Given November’s results and “what appears to be no backing off of incentive use, I think it’s going to be enough to push us into the record," he said.

Oil Prices

Mark LaNeve, Ford’s U.S. sales chief, said he doesn’t foresee rising oil prices slowing the shift to SUVs and trucks because those models are now more fuel efficient. Oil traded above $50 today after OPEC approved its first supply cuts in eight years yesterday. Crude could rally to $60 a barrel, according to Goldman Sachs Group Inc. and Morgan Stanley.

Even so, if gas prices rise above $3 a gallon for a sustained period, consumers could turn away from the big rigs they’ve been buying, Mark Wakefield, managing director and head of the automotive practice for consultant AlixPartners, which has been predicting stable gas prices in the U.S.

“Consumers have shown themselves to be highly correlated to gas prices and vehicle size," Wakefield said. "They’re far more sensitive to rises, to adjusting faster.”

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