* Rise of 15 pct outstrips analysts' expectations
* Strongest annual sales rate for any month since Feb 2008
* Ford US sales up 6.5 pct, Chrysler up 14 pct, Toyota up 17
* Auto executives expect strong December
* Industry concerned with effects of potential 'fiscal
By Ben Klayman and Bernie Woodall
Dec 3 U.S. auto sales in November raced to a
five-year high for that month on a rebound from storm-ravaged
October and the need to replace aging vehicles, leaving industry
executives optimistic about 2013.
Sales in November rose 15 percent to 1.14 million vehicles,
the highest level for that month since 2007, before a recession
caused a dramatic decline in demand and led to the bankruptcy
filings of General Motors Co and Chrysler.
"Vehicle sales are one of the encouraging spots of our
economy," said Gary Bradshaw, portfolio manager with Hodges
Capital Management in Dallas.
Ford Motor Co, Honda Motor Co and Nissan
Motor Co posted better-than-expected sales, while
Chrysler Group LLC, Toyota Motor Corp and Hyundai Motor
Co also reported strong increases that industry
executives and investors said should continue through the end of
However, sales for GM came in short of expectations. The No.
1 U.S. automaker said it benefited less than its rivals from the
November recovery after Superstorm Sandy hit the U.S. Northeast
as a smaller share of GM's sales come from that region. It also
relied less on incentives.
Auto sales are an early indicator each month of U.S.
consumer demand, and the improving housing market and rising
consumer confidence have industry executives optimistic heading
"Looking at the national picture, the apparent recovery in
housing that we talked about last month and the encouraging new
data on consumer sentiment and confidence are all positive
factors," Kurt McNeil, GM's vice president of U.S. sales
operations, said on a conference call.
He declined, however, to provide a 2013 industry sales
forecast until a deal is reached to avoid the so-called fiscal
cliff, a combination of federal spending cuts and steep tax
increases that could tip the U.S. economy back into recession.
"Exactly how much growth we can expect next year will depend
in part on how Congress and the president resolve the fiscal
cliff issue," McNeil added. "Consumers hate the uncertainty, so
an agreement on ways to reduce long-term federal budget deficits
could remove an impediment to growth."
The 15 percent sales gain in November easily surpassed the
gain of 11 to 13 percent most analysts had expected. The annual
sales rate in November of 15.54 million was the industry's
strongest for any month since the 15.55 million rate of February
Superstorm Sandy hurt the last few days of sales in October,
which finished below expectations, but many consumers simply
shifted their purchases to November. In addition, the average
age of cars on the road has risen to just above 11 years, and
industry officials say that will continue to drive demand.
McNeil said the auto industry is clearly heading this year
toward the high end of GM's forecasted range of 14 million to
14.5 million. Many analysts expect the industry to finish 2012
with 14.4 million sales, which would mark the strongest year
since the 16.1 million of 2007.
TrueCar.com analyst Jesse Toprak expects U.S. auto sales to
rise to 15.4 million next year. "Stable growth is really the
motto of the industry."
Jonathan Browning, CEO of Volkswagen Group of
America, sees a continuation of a steady recovery for the
economy as well as for U.S. December and early 2013 auto sales,
but expressed concern about the negative impact on consumer
confidence if the fiscal cliff occurs. VW brand sales rose more
than 29 percent in November.
Ken Czubay, Ford's vice president of U.S. sales, agreed,
saying "the clock is kind of ticking," in reference to the
Washington talks on avoiding the fiscal cliff.
Ford's November sales rose 6.5 percent to 177,673 vehicles,
better than even some of the most optimistic forecasts for the
No. 2 U.S. automaker. In a more positive sign for consumer
demand, Ford's retail sales rose 12 percent.
The company had its strongest small-car sales for the month
in 12 years. Demand for Ford's popular F-150 full-size pickup
truck increased 17 percent, while GM's Chevrolet Silverado
pickup saw sales drop 10 percent.
GM, with 139 days' worth of Silverado inventory at the end
of November, blamed aggressive incentives by Chrysler, Nissan
and Ford for the decline, and said it would focus on curtailing
production of trucks rather than risk becoming trapped in a
GM, with 96 days' worth of Cruze small cars in inventory at
the end of November, plans to idle the Lordstown, Ohio, plant
where the car is built for two weeks in December instead of the
planned one week to reduce supplies, said two people with
knowledge of the plans who asked not to be identified. A
spokesman did not confirm the plans.
Ford's shares closed down 0.3 percent at $11.41, while GM
shares fell 1.4 percent to $25.51 on the New York Stock Exchange
Ford said it planned to build 750,000 vehicles in North
America in the first quarter of 2013, which would be an 11
percent increase from 2012. That would be the highest
first-quarter production level since 2006.
GM's sales rose 3 percent to 186,505 cars and trucks, below
the expectations of several analysts. The company said the
average price paid per vehicle rose $750 from last year.
TrueCar estimated that the industry's average vehicle
selling price in November rose 1.1 percent, or $335, from last
year, and rose a similar amount from October to $30,832.
Chrysler, majority-owned by Fiat SpA, said sales
rose 14 percent to 122,565 cars and trucks, its strongest result
Toyota's sales rose more than 17 percent to 161,695
vehicles. Honda and Nissan both reported better-than-expected
results, with the former jumping about 39 percent and the latter
increasing 13 percent.
Hyundai said sales increased 8 percent to the company's
all-time high for the month. November marked the first sales
results since the South Korean automaker and its Kia Motors Corp
affiliate announced they had overstated the fuel
economy ratings by at least a mile per gallon on more than 1
million recently sold vehicles.
In the battle for the luxury sales title for the U.S.
market, Daimler's Mercedes brand leads last year's
winner, BMW, by fewer than 2,000 vehicles with one
month to go.