Early holiday sales may have been a disappointment for many retailers, but car dealerships, apparently, were not among them.
Several automakers posted their best November auto sales figures in several years last month, as the industry overall headed toward a stronger performance than most had anticipated. Fiat Chrysler saw its sales rise 20 percent from November 2013, thanks to huge gains from its Ram and Jeep brands (up 31 percent and 27 percent, respectively). Overall, Chrysler said it sold 170,839 vehicles last month, posting its best November since 2001.
“The buzz around Black Friday helped drive strong showroom traffic, but there was a lot more at work in the market,” GM sales executive Kurt McNeil said in the automaker’s data release Tuesday.
Ford was the only one of the “big three” US automakers that saw a dip last month, with sales falling 1.8 percent year-over-year. But the company’s SUV sales were a silver lining, increasing by 15 percent year-over-year.
Among Japanese automakers, Honda and Toyota’s US sales climbed 4.6 percent and 3 percent respectively, while Nissan saw a 3.1 percent drop.
Successful holiday promotions played a part, but more favorable conditions for consumers have also spurred the auto industry’s growth over the past year. “The economy is improving, albeit slowly,” Michelle Krebs, a research analyst with AutoTrader.com in Atlanta, writes via e-mail. “Unemployment is the lowest it has been in years – under 6 percent. Consumers who have jobs feel secure enough to take on a car loan. The 'wealth factor' is at play as well: housing prices are rising and the stock market remains strong, making people feel richer, at least on paper. Credit is cheap and it is widely available in a variety of forms to make cars affordable.”
Another strong motivator: cheap fuel. Gas prices have been hovering at or below $3 per gallon nationally since early November. This has helped “convince people to buy bigger vehicles, like SUVs and pickup trucks, because their gas bill will be lower,” Ms. Krebs says. “In addition, lower gas prices mean more money in the household budget, which helps make a monthly car payment and also makes it less expensive to operate that new car, which surely gets better fuel economy than the one that it replaces.”
The continued torrid pace for auto sales caught experts a bit off guard. Holiday promotions aside, Krebs notes, dealers have been offering relatively few discounts, and transaction prices have been higher. Overall, economists polled by Reuters expected sales to come in at a 16.7 million annualized pace, but they are likely to come in at a pace well over 17 million. Krebs expects sales to keep increasing in 2015, but doubts they will maintain the speedy growth rate of recent months. “But we could end up being surprised,” she writes.