US auto sales raced to a five-year high last month on a rebound from storm-ravaged October and the need to replace aging vehicles, leaving industry executives optimistic about next year.
Sales 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 (GM) 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 the year.
However, sales for GM came in short of expectations. The No. 1 US automaker said it benefited less than its rivals from last month’s recovery after superstorm Sandy hit the US 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 US consumer demand, and the improving housing market and rising consumer confidence have industry executives optimistic heading into next year.
“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 US sales operations, said on a conference call.
However, he declined to provide an industry sales forecast for next year 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 US 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.”
Ken Czubay, Ford’s vice president of US sales, agreed, saying: “The clock is kind of ticking,” in reference to the Washington talks on avoiding the fiscal cliff.
Ford’s sales last month rose 6.5 percent to 177,673 vehicles, better than even some of the most optimistic forecasts for the No. 2 US automaker.
In a more positive sign for consumer demand, Ford said it planned to build 750,000 vehicles in North America in the first quarter of next year, which would be an 11 percent increase from this year. That would be the highest first-quarter production level since 2006.
Chrysler, majority-owned by Fiat SpA, said sales rose 14 percent to 122,565 cars and trucks, its strongest result since 2007.
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. Last month 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 (8.6km/liter) on more than 1 million recently sold vehicles.