DETROIT – Chrysler and Hyundai reported strong sales in November as Americans continue to buy cars and trucks at a brisk pace.
Industry analysts say that economic conditions lined up to make November strong. Home values are rising, hiring is up and interest rates remain low. Americans are more confident about the economy than they’ve been in a while. And that means they’re willing to make big purchases.
Chrysler’s U.S. sales rose 14 per cent last month, the company said Monday. It predicted that industry-wide sales would run at an annual rate of 15.3 million in November, making it the best month is more than four years. Hyundai said its sales rose 8 per cent last month over a year earlier.
The automakers were the first to report sales Monday.
November sales, when calculated on an annual basis, are likely to be 15 million or more, the highest rate since March of 2008, according to LMC Automotive, a Detroit-area industry consulting firm. That’s above the 14.3 million annual rate so far this year, even though November is normally a lacklustre month due to cold weather and holiday anticipation.
The economy isn’t the only thing driving the increase. Superstorm Sandy, which hit at the end of October, forced buyers in the Northeast to postpone purchases until November. Also, people whose cars were damaged by the storm are starting to replace them. And because the average age of a vehicle on U.S. roads is approaching 11 years, people are being forced to make costly repairs or buy a new car or truck.
“Everything is kind of moving along almost in concert now,” says Jeff Schuster, senior vice-president of forecasting for LMC.
If sales end up at 15 million this year, it would be a vast improvement over the 10.4 million during the recession in 2009. Sales would still fall short of the recent peak of around 17 million in 2005.
Chrysler results were led by the Dodge brand, which saw sales rise 32 per cent. The company says it sold 123,000 vehicles. Dodge Journey crossover SUV sales rose 77 per cent.
South Korea’s Hyundai reported sales of just over 53,000 for the month, led by the Sonata midsize car and the Elantra compact.
Foreign-based brands like Hyundai should see the biggest sales increases in November due to big discounts, says Jesse Toprak, senior analyst for automotive pricing site TrueCar.com. TrueCar estimates that Hyundai and Kia, which were admonished by the U.S. government in late October for overstating gas mileage, increased incentive spending by nearly 30 per cent. Nissan spending was up 45 per cent, while Toyota spending rose 9 per cent from a year earlier.
Most analysts say they are seeing little sales impact from the “fiscal cliff” negotiations between Congress and the White House. The term refers to sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit. Economists say that those measures, if implemented, could push the U.S. economy back into a recession.
Schuster says the fiscal cliff and a possible recession are among the risks that could derail the auto sales recovery next year.