Automakers, including the Detroit Three, on Tuesday reported total sales last month of nearly 1.25 million cars and trucks, a 9 percent increase from a year ago and the highest November since sales of 1.26 million in 2003.Watch video
DETROIT, MI- The U.S. automotive appears to be ending 2013 with the recession as a speck of dust in its rear view mirror.
Automakers, including the Detroit Three, on Tuesday reported total sales last month of nearly 1.25 million cars and trucks, a 9 percent increase from a year ago and the highest November since sales of 1.26 million in 2003.
“That pretty much shows how strong things are,” said Jessica Caldwell, Edmunds.com senior analyst, during a conference call. “This month certainly beat expectations out there. We were expecting a strong holiday weekend, like we did last year, but it was stronger, I think, than most people anticipated.”
With about a week left in November, many industry experts and analysts predicted sales to increase 3-6 percent compared to a year ago. Officials said they just underestimated the strength of the economy and the impact Black Friday deals, such as employee/supplier pricing promotions, would have on November sales.
Leading the way for the industry was Chrysler Group LLC, which posted an impressive 16 percent increase over November 2012 to more than 142,000 vehicles sold.
Excluding Fiat, all of the Auburn Hills-based automaker’s brands reported double-digit sales increase compared to last year, including Jeep and Ram Truck brands, up 30 percent and 25 percent, respectively. “Chrysler saw a significant push from the Jeep portfolio, which has benefited from both an ongoing surge in demand for small CUVs as well as a more recent uptick in demand for larger sport utility vehicles,” said Alec Gutierrez, senior analyst for Kelley Blue Book.
For Jeep, November was a particularly important month. It marked the first full month of sales for its 2014 Jeep Cherokee, which was delayed for weeks, if not months. Chrysler sold more than 10,100 Cherokees last month, following deliveries starting in mid-October.
Following Chrysler’s success was General Motors Co., up 14 percent compared to a year ago; Nissan up 11 percent; Toyota increasing 10 percent; and Ford Motor Co. reporting a 7 percent uptick. Of major automakers, only Volkswagen -- as it has primarily the entire year -- and Honda reported sales drops. VW was down 16 percent. Honda was down less than 1 percent.
Analysts said although November sales were extremely strong as dealerships and automakers offered special deals for Black Friday, industry incentives – the amount of money an automaker offers off on a particular vehicle – were flat.
2013 Lincoln MKZ HybridJesse Toprak, a senior analyst for TrueCar.com, said the overall strength of the economy and automakers spreading incentives out over more months than they have in the past, helps explain the flat rates.
“We’re just generally in a positive trajectory,” he said. “Even slow months appear to be stronger than we anticipate."
Overall, industry incentives were about $2,300, as automakers sell down their 2013 model year vehicles and dealers receive the 2014 models.
One of the most prominent Black Friday ad blitzes came from GM, which sold 212,060 vehicles in November. Consumers received supplier pricing for about 10 days on a handful of models to attract attention to its Black Friday sales events and products.
“We had some good marketing and merchandising around that sales event,” said Brian Sweeney, Buick-GMC U.S. sales and service vice president, during a conference call Tuesday morning. “We felt pretty breakthrough as an automotive manufacturer.”
According to Edmunds.com, GM’s average incentive spending last month was $2,788 – higher than the industry average, but down nearly 10 percent from a year ago and lower than Ford, Chrysler and Nissan.
GM North American President and CEO Mark Reuss said the Detroit-based automaker, since emerging from bankruptcy in 2009, has switched the way it does business – focusing on investing in its products and dealers rather than incentives.
View full sizeIn this Wednesday, Sept. 18, 2013 photo Chevrolet passenger cars form a row on a dealer's lot in Needham, Mass. (AP Photo/Steven Senne)“We have beaten the estimates because we have a total value experience and we don’t have to rely solely on incentives and matching (other companies),” he said. “This is a fundamental change that you’re seeing here, at least in our case.”
Like GM, many other automakers experienced strong sales across their brands and vehicle segments in November. Even Ford’s Lincoln brand, which has struggled in recent years, posted a 17.4 percent increase last month thanks to its Lincoln MKZ.
Cars and Trucks, including SUVs, primarily all performed quite well for the domestics, showing off their strength across segments, according to Karl Brauer, KBB senior analyst.
“Why are the domestics doing so well? It’s because all the things they’ve typically done well with for decades – trucks and SUVS – did well … plus things that they don’t traditionally do well in – car sales – also did well,” he told MLive during a phone interview. “So they’ve basically got this whole secondary line of success they didn’t used to ever have.”
Overall, the Detroit Three combined for 544,784 vehicles sold in November, up 12 percent from a year ago. With one month to go until 2014, the three Detroit automakers have sold nearly 6.4 million vehicles, an 11 percent increase from the same time in 2012.
Analysts said even with such a strong November, as automakers spread their incentives and sell-down previous model years quicker than before, that doesn’t mean the industry is expected to slow down in December.
“I think December will close the year off on a high-note,” Caldwell said. “Last December was a tough month, but it looks like this momentum is very strong.”
Many automakers and experts have upped their yearly sales estimates for 2013 from the low-15 million ranges to around 15.6-15.8 million vehicles. Expectations for 2014 are in the mid-16 million range.