||After a Slow Start, Analysts See a Big Finish for Auto Sales in November
Hurricane, Holiday May Drive Transactions
Auto sales got off to a slow start in November, but demand to replace hurricane-damaged vehicles and positive economic signs have helped increase showroom traffic.
Automakers and dealerships are expecting brisk sales during the final week of the month, helped by Thanksgiving weekend and end-of-year promotions.
The holiday discount frenzy "seems louder than at anytime in the past," said Jessica Caldwell, senior analyst with Edmunds.com.
At midmonth, the auto industry was on pace to post its lowest selling rate of the year, Caldwell said, but she believes November will end up as one of the best months of 2012.
She forecasts a seasonally adjusted, annualized selling rate in the "mid-to-high" 14 million range; that would be up from 14.3 million in October but likely below the September rate of 14.9 million.
J.D. Power and Associates and LMC Automotive predict that November will have a 15 million SAAR, with double-digit percentage increases in both overall and retail sales. "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.
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.
Hurricane Sandy, which smashed into the East Coast Oct. 29, put many dealers out of commission for at least a few days, but most are now operating as usual.
"As soon as everybody had power back, business has been normal," said Lou Narcisi, general sales manager at Acme Nissan in South Brunswick, N.J. "It's just been what we would have normally expected out of November before the wind started blowing and the first tree fell."
In the hardest-hit areas, dealers have had busy showrooms and service lanes as customers scramble to replace or repair damaged vehicles.
At Toyota World of Lakewood, nine miles from the Atlantic coast in Lakewood Township, N.J., the general manager, Cary Rose, said those with the means to buy a new car right away started coming in as soon as the store had reopened. Traffic has picked up more as people learned how much they could expect from insurance, and Rose expects the dealership to be busy through the end of the year as reimbursement checks arrive.
He said only about 5 percent of sales this month have involved a trade-in, compared with more than half in an average month.
"We've had a huge spike in business, and it's mostly replacement vehicles," Rose said. "It's going to be a big-volume month, but not big-profit because these are our people. We're not trying to take advantage of this opportunity and make it a big-profit game."
Analysts have estimated that as many as 250,000 vehicles might have been flooded or crushed during last month's storm. The majority are expected to be replaced with used vehicles, even as tight supplies of those have pushed prices higher.
Along with the added sales in Sandy's aftermath, automakers such as Toyota and Nissan are hoping to benefit from starting their year-end sales in November instead of December. Many finished 2011 on a strong note by doing the same a year ago.
"This is an excellent time for consumers to be in the market," Peter Nesvold, an auto analyst with Jefferies & Co., wrote in a recent report.
Automakers have been concerned that their sales would be hurt in the final months of 2012 by uncertainty related to the so-called fiscal cliff, when many Americans would feel the effects of tax increases and government spending cuts that are scheduled to take effect. Ford Motor Co. Executive Chairman Bill Ford last week said resolving the fiscal cliff is "vitally important for the economy."
The industry has been buoyed by reports of productive discussions on Capitol Hill aimed at preventing economic activity from slowing suddenly.
"At this point it seems less and less likely that we're going to go sailing over the cliff," said Lacey Plache, the chief economist for Edmunds.com. "Consumers are feeling more upbeat."
(Source: Automotive News, 11/26/12)
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