Record Nov. U.S. sales predicted amid big holiday promotions

U.S. auto sales are on pace for the strongest November ever, four forecasters say, breaking the industry’s streak of three consecutive monthly declines and keeping open the possibility that 2016 can squeak ahead of last year’s record.Big promotions over the long Thanksgiving weekend and two extra selling days in the month are expected to push sales up 4 percent from November 2015, according to Kelley Blue Book and Barclays Capital analyst Brian Johnson. LMC Automotive is projecting a 5 percent increase, while Edmunds.com estimates a 2.7 percent gain.The forecasts call for a seasonally adjusted, annualized selling rate of 17.6 million to 17.9 million, down slightly from 17.98 million in October.“It’s probably no coincidence that this month’s strong sales performance comes at the same time that the Dow Jones average reached an all-time high,” Jessica Caldwell, Edmunds’ executive director of industry analysis, said in a statement.“Now that the presidential election is over, shoppers have more confidence in the economy than they had just a month ago, and that gives them extra motivation to make big-ticket purchases. If this month’s forecast holds, December’s year-over-year sales only need to be flat to set a new annual record in 2016.”Automakers are scheduled to report this month’s sales on Thursday. All four forecasts show sales easily topping the current November record of 1.33 million set in 2001.Election jittersThe month started with consumers a bit jittery leading up to Election Day and after Donald Trump’s surprising victory, but last week, the Dow Jones Industrial Average surpassed 19,000 for the first time ever just as automakers were offering some of their biggest discounts of the year. Auto sales historically have a close correlation with the stock market.“The election had a minimal effect on vehicle sales,” said Deirdre Borrego, senior vice president and general manager of automotive data and analytics at J.D. Power, which jointly develops LMC’s forecast. “While sales volume was suppressed for a short period during the election, the declines were quickly recouped by the end of the election week. … However, these results are being driven in part by elevated incentive levels, which represent a meaningful risk to the long-term health of the auto industry.”Incentive spending in the first 17 days of November averaged $3,886 per vehicle, 15 percent higher than a year ago and just shy of the record $3,939 set in September, J.D. Power said. It said Black Friday and the rest of the Thanksgiving weekend are expected to account for a quarter of November’s total volume, while Barclays said as much as half of the month’s transactions will occur in the final week.“There are still a number of challenges to U.S. light vehicle volumes: rising interest rates, weakening residuals, potential tightening in financing availability,” Johnson, the Barclays analyst, wrote in a report today. “However, perhaps these headwinds are offset by a stronger economy -- ultimately leading to a continued plateau in the 17 million range, rather than the ‘eroding plateau,’ which we’ve forecast until now.”Product shift intensifiesKBB analyst Tim Fleming said the shift toward SUVs and crossovers intensified this month, with light trucks potentially outselling cars by a 2-to-1 margin. KBB said it expects sales of midsize cars to fall 2.2 percent this month, while full-size pickups rise 10 percent and midsize SUVs and crossovers jump 11 percent.The KBB and Edmunds forecasts show market share gains for General Motors, American Honda, Nissan North America, Hyundai-Kia and Volkswagen Group of America. They project that Ford Motor Co. and Toyota Motor Sales U.S.A. will post higher volumes but lower share.Fiat Chrysler is the only major automaker projected to report lower sales, with Edmunds estimating a 14 percent decline. That would mark FCA’s largest year-over-year drop since November 2009.

Record Nov. U.S. sales predicted amid big holiday promotions

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