Major Automaker Sales Rise as Industry Rebounds
All major automakers but Toyota reported strong U.S. sales increases in November as the auto industry's slow-motion recovery continued to gain traction.
Ford,General Motors, Chrysler,Nissan,Hyundai and Honda all reported double-digit increases. Only Toyota, which has been hurt by a string of safety recalls, had a sales drop.
Industry analysts say the solid sales numbers, combined with a strong October, show that consumers who have kept their jobs through the economic downturn are now feeling confident enough to spend money and replace older vehicles.
Ford reported the largest increase of the Detroit Three on Wednesday—up 20 percent from November of last year. GM sales rose 11 percent and Chrysler showed a 17 percent increase.
GM, the first automaker to report U.S. sales figures Wednesday, said it sold just under 169,000 vehicles in November compared with 151,000 in the same month last year. Much of the growth was driven by crossover vehicles such as the Chevrolet Equinox and Cadillac SRX, which are like sport utility vehicles but are more efficient because they are built on car underpinnings.
Ford's numbers were fueled by truck sales that went up 34 percent. The company sold just over 147,000 vehicles in November compared with 123,000 last year.
The year-ago result includes sales for Volvo, which Ford sold earlier this year. Sales of the Fusion midsize sedan were up 28 percent, and Ford said it already has set a full-year sales record for the car.
At GM, Equinox sales were up more than 60 percent, while SRX sales rose nearly 36 percent. GM also saw more modest increases in passenger car and pickup truck sales. The Chevrolet Silverado pickup, traditionally GM's top-seller, saw an increase of 16 percent.
Sales of GM's four brands—Chevrolet, Buick, GMC and Cadillac— rose 21 percent compared with the same brands last November.
GM got rid of Pontiac, Saturn, Hummer and Saab as part of its bankruptcy restructuring. Buick led all GM brands with a 36 percent sales jump.
Yingzi Su, GM's senior economist, said the stable and increasing auto sales mean that consumers with jobs are starting to spend again, and that's a good sign for the broader economic recovery.
Once businesses see increased consumer spending, they will be more willing to hire workers, a factor that has held back the economic recovery for months.
GM reported increased showroom traffic toward the end of the month, after its initial public stock offering on Nov. 18.
The U.S. government, which spent $49.5 billion bailing GM out of its financial troubles last year, cut its stake in the company from 61 percent to about 33 percent by selling stock in the IPO.
GM has maintained that government ownership has hurt its image with consumers and its sales.
And Chryslerreported on Wednesday, saying its sales rose 16.7 percent in November from a year ago. The automaker sold 74,152 vs. 63,560 in 2009. The automaer reported its eighth-straight month of year-over-year sales increases, driven largely by the Jeep and Ram brands. The newly redesigned Jeep Grand Cherokee continued to sell well, more than tripling from November of last year.
Hyundai's big sales increase was led by the popular Sonata midsize sedan, which has sold well since its recent redesign. Sales were up 72 percent. The Korean automaker's sales have been rising all year.
At Honda, the increase was led by the Crosstour, a crossover vehicle that's like a sport utility but is more efficient because it's built on car underpinnings. Nissan was led by the Rogue small crossover, which saw a 67 percent sales increase.
However,Toyota was the only major automaker to report a decline in sales. The Japanese firm said sales were down in November by 3.3 percent from the same time in 2009.
Toyota says it sold just over 129,000 cars and trucks, compared with nearly 134,000 in November of last year. The company's Toyota Division saw a drop of almost 4 percent, while Lexus luxury brand sales fell 1.4 percent.
Toyota has been fighting a string of embarrassing safety recalls. The automaker has called back more than 10 million vehicles worldwide, mostly for problems with sticky gas pedals or floor mats that can trap the accelerator pedal.
Internationally, Japan November car sales fell 31 percent excluding mini-vehicles, a third consecutive monthly decline. Most European markets also posted November auto sales declines after government incentive programs came to an end.
Car sales fell 11 percent in France, 25.5 percent in Spain and 21 percent in Italy, which all had scrappage programs. Sales rose more than 15 percent in Belgium, which did not have incentive programs.
Industry analysts J.D. Power and Associates predicted that November U.S. sales overall would rise about 15 percent, while consumer website Edmunds.comsaid sales would increase 17 percent compared with November 2009.
The increased sales likely are due to a combination of rising confidence and pent-up demand as people replace vehicles they have kept for longer than normal during a severe auto industry downturn, said Bruce Clark, senior vice president of Moody's Investors Service.
"There is a degree of pent-up demand that's being met gradually by people who have kept jobs and can go out and afford to do such things," Clark said. The sales are not as robust as historic highs from the early 2000s, but they are still a good sign for the industry, Clark said.
"It makes sense to me that we should have some modest growth of the type that we're talking about right now," he said.
Moody's predicted U.S. sales this year of 11.5 million cars and trucks, rising to around 13 million next year, still far short of the 2000 peak of 17 million. Sales so far this year are running at an annual rate that matches the Moody's prediction. That's less than the 12.5 million vehicles that are typically scrapped each year. Eventually, that means auto sales will have to increase as people replace their older cars, Clark said.
"I see an upward trajectory with less volatility than we've had over the last several months," Clark said.
Americans' confidence in the economy rose to a five-month high in November, showing increased optimism for the first half of next year.
The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence Index rose to 54.1 in November, up from a revised 49.9 in October. Consumer spending also was up. The confidence report came in the shadow of high unemployment and declining home values.