November sales are expected to be up 4% compared with year-ago figures, but some makers are expected to see a slide in their monthly sales.
U.S. new car sales are expected to continue their upward trend for November, though preliminary figures suggest some makers could slide into the negative column as the rate of the industry’s recovery seems to be slowing from the torrid pace earlier this year.
New vehicle sales, on the whole are expected to be up about 4% for November, according to data crunched by J.D. Power and Associates and LMC Automotive.
“Consumer demand for new vehicles remains strong,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power.
But “we expect some makers will be down for the month,” cautioned John Mendel, the top U.S. executive at Honda Motor Co., during a media conference call. Mendel based his concerns on preliminary numbers shared by a number of major automakers.
There has been growing concern about where the automotive market is heading. Sales took their first dip in three years during September – though that downturn was largely blamed on a fluke in the industry’s data tracking calendar. Volumes rebounded in October, and most analysts are upbeat about the months ahead.
Total light vehicle sales in 2013 are expected to reach 15.6 million units and retail light-vehicle sales should total 12.8 million units, added Jeff Schuster of LMC automotive, who also predicted another increase in sales for 2014.
“Improvements in the economy and consumer confidence in 2014 will drive stable growth to 16.1 million units for total light-vehicle sales and 13.2 million units for retail light vehicles.” Schuster said.
A new, upbeat economic forecast from economists at the University of Michigan suggests the nation’s core inflation rate will remain below 2% during the next two years, while oil prices will hold firm around $95 per barrel through 2015, and light-vehicle sales will steadily rise from 15.5 million units range this year to 16 million in 2014 and 16.3 million in 2015.
“Strength in domestically produced vehicles has helped drive the sales recovery since 2009,” the U-M forecast noted. “And pent-up demand remains strong. The average age of vehicles on the road has continued to rise, and younger drivers, who are more likely to be unemployed or debt-constrained, have been underrepresented in the market to date.
“Together, these facts suggest further growth in vehicle sales in the coming year, as unemployment continues to fall,” the forecast said.
Meanwhile, J.D. Power’s Humphrey said U.S. consumers are expected to spend more than $30 billion on new vehicles in November, a historic high for the month, with light-vehicle retail sales on pace to exceed 1 million for the month, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive.
Honda’s Mendel said his company is itself on track to reach a new sales record “when the dust settles.”
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It’s not just sales volumes that are on the rise, however. Through the first half of November, the average transaction price – what consumers actually pay after accounting for incentives and options — of new vehicles rose to $30,079, an increase of $461 from November 2012. In combination, sales and transaction price growth means that consumers will spend 10% more on new vehicles during the month than they did in November 2012, and nearly double the level of November 2008, according to Power data.
“The level of consumer spending in November is impressive and consistent with trends observed throughout 2013,” said Humphrey. “Indications are that total consumer spending on new vehicles in 2013 will exceed $370 billion, the highest on record and considerably above even pre-recession levels.”
For his part, LMC’s Schuster said sales in September and October were plagued by external variables that caused a lower level of demand, so the returning strength in November confirms that the underlying recovery remains intact.
Year-to-date production in North America through October is up 4% from the same period in 2012. Production in October was at 1.6 million units, a 7% increase from October 2012.
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The lower October sales pace, combined with higher production, has led to a 77-day supply, higher than the 60- to 65-day supply that is considered the industry norm.
“While this level is considered high, it is normal for this time of year as manufacturers hurry to build up inventory at dealerships to meet year-end demand,” said Bill Rinna, senior manager, North American forecasts at LMC Automotive. “Given this, the production pace should not be affected and we are maintaining our volume outlook for 2013 North American production at 16.1 million units.”
First-quarter production in 2014 is expected to increase 4% to 4.2 million units from the same period in 2013. Overall for 2014, LMC Automotive is expecting production volume to grow 3% to 16.6 million units.
Paul A. Eisenstein contributed to this report.