New-car sales show strength in November

Nov 28, 2012

Although Kelly Blue Book estimated that Hurricane Sandy on Oct. 29 destroyed between 200,000 and 300,000 new and used vehicles, the new-vehicle selling rate seems to have returned to a healthy rate in November.

Total light-vehicle sales are projected to increase 12% over November 2011 with a predicted seasonally adjusted rate (SAAR) of 15 million, according to a monthly sales forecast developed by J.D. Power and Associates’ Power Information Network (PIN) and LMC Automotive. October’s auto sales rose only 7% from the previous year as Sandy stifled month-end deliveries in the Northeast and Atlantic.

“Sales have strengthened each week in November, which bodes well for a strong finish to the month and the year,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. “We expect healthy sales in December, as the industry continues to recover from Sandy and leads into its year-end sales events.”

November is forecasted to reflect the highest retail selling rate since January 2008. Jeff Schuster, senior vice president of forecasting at LMC Automotive, said that the need for consumers to replace aging vehicles is stronger than the effects of natural disasters and fiscal turmoil.

Schuster noted, “A sustained recovery pace in auto sales is expected over the next six months, barring any fiscal cliff hangover, but the medium-term forecast is still dependent on more pronounced economic activity and growth.”

In addition to customer demand for new vehicles, the strong sales are at attributed to end-of-the year discounts and “holiday discount frenzy,” as reported by Nick Bunkley of Automotive News. Dealers typically make a large percentage of their November and December sales during the final week of each month, around Thanksgiving, Christmas and New Year’s Eve.

J.D. Power and Associates and LMC Automotive forecast U.S. sales in 2013 at 15 million units for total light-vehicles and 12.2 million for retail sales. Although the number represents a slower growth rate of 4% from 2012, there continues to be a possibility of accelerating the growth in 2013, as the level of uncertainty is expected to be reduced in the first of the year.

Kelly Blue Book reported earlier this month that it expects major redesigns in the full-size truck and sport utility categories in 2013; redesigns introduced to the market in the past few years have revolutionized vehicles’ style, amenities and fuel economy. Because new vehicle designs that help drive sales often translate into new aftermarket products, restyling retailers might want to keep their eyes peeled and be prepared to make these new accessories available to new-vehicle owners.