Despite a devastating hurricane that wiped away much of the Eastern seaboard in October and the constant warnings of an impending fiscal cliff and tax hikes in the coming year, many automakers saw a substantial sales gain in November. In fact, the U.S. auto industry saw a 15 percent increase as a whole last month.
Honda Leads the Way
As makers of both the Honda and Acura brands, American Honda saw the highest percentage gain of any major automaker, with 116,580 vehicles sold in November — a whopping 39 percent increase from the same month last year. The sedan saw an 82 percent jump during the same time period.
The Civic was the top seller for the month, at 30,075 vehicles, an increase of 75 percent from the same time last year. The recently redesigned Accord and CR-V crossover also saw vigorous sales.
John Mendel, American Honda executive vice president of sales, said in a statement: “We are now surpassing sales records set pre-recession, a true sign that our business has recovered.”
Volkswagen Sees Best November Since 1973
Volkswagen saw an increase of 29 percent, selling 36,728 vehicles last month — its best November in 39 years. The Jetta and Passat sedan sales contributed the most to the substantial gain. The company’s top brand, Audi, also announced year-over-year gains for the 23rd month in a row.
Jonathan Browning, president and CEO of Volkswagen Group of America, said in a statement: “This is a testament to the appeal of our affordable German-engineered vehicles and the strength of our dealer network.”
Chrysler Reports Impressive Gains
Compared with a year ago, Chrysler Group reported a 14 percent increase in sales in November, with Fiat reporting a record month, selling more than 3,600 units. Jeep was the only exception, as the brand saw a decrease of 3 percent year-over-year.
This was Chrysler’s 32ndconsecutive month of sales gains, since the company nearly folded.
Reid Bigland, CEO of Dodge and U.S. sales for the group, said: “Even with all the talk of a looming fiscal cliff, Chrysler Group is well positioned for a strong sales finish to the year.”
Ford Sales Up 6 Percent
Ford Motor Co. reported a 6 percent gain in November, with retail sales increasing 12 percent. Car sales led the gain at 15 percent, with trucks growing 4 percent and utilities rising 2 percent. Small car sales rocketed 76 percent, with electric vehicles gaining momentum.
Ken Czubay, vice president of the company’s U.S. marketing, sales and service said: “We saw sharp increases in demand for Ford’s fuel-efficient small cars, our best-ever month for electrified vehicles and growing demand for our fuel-efficient and capable F-series pickups.”
Ford announced it plans to increase production in the first quarter of 2013 to 750,000 vehicles, an 11 percent increase.
GM Releases Mixed Results
GM deliveries rose 3 percent, with retail sales reportedly flat and fleet sales increasing 16 percent. There was an 11 percent reduction in truck sales for the month. Total passenger sales, however, were up 19 percent, and crossovers grew by 9 percent. Best sellers included Cadillac, Buick and Chevrolet.
Nissan, Hyundai and Toyota Also See Boost
Nissan also beat its own record in November, with an increase of 13 percent from the same time last year. Hyundai reported its best-ever November, with a 7.8 percent increase from last year’s numbers. Toyota sales, which included its luxury brand, Lexus, were up 17.2 percent last month, which has been attributed partly to special incentives from October.
What’s Driving the Auto Market?
Some economists attribute the November boost in auto sales during an otherwise tough economy to a combination of circumstances ranging from an increase in consumer confidence to the influx of new cars purchased after tens of thousands were damaged during Hurricane Sandy in October.
Another large contributing factor, which concerns many economists, is the amount of credit being extended to a group of consumers with somewhat flawed credit.
According to Experian, the average new-car buyer credit score decreased from 762 during the second quarter of 2011 to 753 this year. Average scores for used cars have also dropped from 671 to 662. Nationally, the median credit score is 711, and borrowers with a lower rating are more likely to be categorized as sub- or non-prime.
According to Experian, while auto loans saw a 5.5 percent increase in the second quarter when compared with the same time last year, “riskier” buyers accounted for 43.9 percent of the total.
Some say the Federal Reserve’s efforts to keep interest rates low motivated more investors to invest in securities backed by subprime car loans.
For example, Atlanta’s Global Lending Services LLC, a company that lends to subprime and deep-subprime borrowers and sometimes to those with no credit history, has invested $100 million on higher-risk car loans.
Record Sales Expected to Continue
Dealer sales are projected to increase 4 percent to about 15 million new cars in the new year, according to the research group Edmunds.com. While the rise in sales is healthy for the auto industry, economists have reservations regarding the lower credit standards for new car loans, especially when more than 12 million Americans are still unemployed.
John Silvia, chief economist at Wells Fargo Securities Inc., warned about the economic implications of lowering credit standards. “Once this cycle gets going, we could be in deep trouble in two or three years, because everybody starts pushing the envelope and pushing the envelope,” he said. “Are we drifting into the same problem we did with adjustable-rate mortgages in 2004?”