Automakers thankful auto sales are on pace for records – Detroit Free Press
Automakers continue to be thankful for a record-setting pace new cars and trucks sales that are likely to continue through the end of 2015 and well into next year.
The U.S. automotive industry is on track to sell more than 1.33 million new vehicles in November, according to Edmunds.com. If that happens, it would mark the highest volume on record for the month of November.
The U.S. auto industry’s sales volume is attributed to credit and car loans that are easy to obtain, low interest rates, low gas prices and a strong economy, among other factors.
“U.S. auto sales are now clearly on the path to set a record in 2015, with volume we haven’t seen in 15 years,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive, in a recent report. “Even with the strong possibility for the Fed to increase interest rates, growth should continue into 2016, with sales expected to reach 17.8 million units.”
Automakers are increasingly using Thanksgiving holiday sales and special incentives to boost sales as the year comes to a close.
“Not even a decade ago, November was a notoriously slow sales month, and it typically ranked as the third worst month for sales in the calendar year,” said Jessica Caldwell, director of industry analysis for car-shopping Web site Edmunds.com, in a report.
Caldwell estimates the pace of November automotive sales will be 18.3 million on an annualized basis, which also would be a record for the month.
Kelley Blue Books’s forecast for November sales is slightly more conservative with an estimates of 1.3 million cars and trucks during the month. But that would still propel November to the highest sales tally for the month since 2001.
“Black Friday deals on vehicles have grown in popularity in recent years and should be a big contributor to this month’s sales results,” Tim Fleming, analyst for Kelley Blue Book, said in a report.
For automakers, the Thanksgiving and Christmas retail season is a chance to chalk up some extra sales.
“This year, we have a lot of momentum, and we want to keep it going,” said Paul Beckett, director of sales operations for Buick and GMC. “It’s a natural retail play for us.” It’s also a chance to clear the lots of outgoing 2015 models, making way for the 2016 cars.
Shoppers have more time to focus on buying a car over a long weekend, says Erich Merkle, Ford’s sales analyst. It’s also a less crowded shopping experience than what people find in department or mass-market stores.
“There are a number of people who won’t go out to retailers on Black Friday because of the crowds,” Merkle said. For automakers, “it’s a good time to connect with customers.”
Big holiday discounts are likely to continue in December, said Eric Lyman, vice president of industry insights for TrueCar, a website for auto buyers. As the year comes to an end, car dealers will be under pressure to sell a few more cars to cash in on higher allotments and other incentives from automakers.
Most of the best Black Friday deals are from Detroit’s Big 3 automakers, Lyman says.
GM is running a monthlong Black Friday promotion, including up to 20% off selected models. Fiat Chrysler offers cut-rate financing.
The deals may vary by city. Markets such as New York and Los Angeles, Beckett says, are tilted more toward leasing than buying — so there may be some sweet lease deals in those cities. He says GMC is promoting its Sierra full-size pickup while Buick is strong with crossovers such as the Enclave and Encore.
There are, however, reasons for automakers to be concerned.
Industry incentive spending has been on the rise in recent months and has topped $3,000 on average since July 2015, according to Kelley Blue Book, which said it plans to carefully watch to see whether consumer demand can support such high sales volume without higher levels of incentive spending.
John Humphrey, senior vice president of the global automotive practice at J.D. Power, has similar concerns.
“Lease and long-term loan penetration are at all-time highs and could increase even more as a way to offset higher interest rates in the months to come,” he said.
Contact Brent Snavely: 313-222-6512 or firstname.lastname@example.org. Follow him on Twitter @BrentSnavely.