With millions of dollars worth of television commercials airing this month—and millions more in incentive money on the table—automakers are expected to end the year with a bang.
Total vehicle sales are expected to be up at least 4 percent year over year, with the industry anticipating all-time record consumer spending on new vehicles, according to a forecast.
While new car sales started the month slowly, they are expected to finish strong, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive. That would be a welcome development for industry planners concerned about a recent bulge in dealer inventories, which has led several manufacturers to trim production.
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Consumers are expected to spend more than $34 billion on new vehicles this month, a historic high for December. It reflects not just the end-of-year sales burst but record transaction prices, according to the forecast.
The optimism was reinforced by a report released by the Department of Commerce on Friday indicating that the economy was expanding more rapidly than had been thought. The department now estimates the country's economy grew by 4.1 percent during the third quarter.
"Strong consumer demand in December is the culmination of another strong year for the automotive industry," said John Humphrey, senior vice president of the global automotive practice at J.D. Power. "Retail sales in 2013 are expected to reach $12.8 million, with consumer spending reaching a record $375 billion, a $40 billion increase from 2012."
Total light-vehicle sales in December are projected at 1.4 million, up 4 percent increase from las year, with a slight year-over-year rise in fleet volume. Fleet share of total light-vehicle sales in December remains below 17 percent, compared with 17.6 percent for the year as a whole.
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Total light-vehicle sales should finish 2013 at 15.6 million units. LMC Automotive has increased both its total- and retail light-vehicle sales forecasts for 2014 by 100,000, to 16.2 million and 13.3 million units, respectively.