(Reuters) - Higher incentives and better model selection in November led to the best month for U.S. auto sales in more than two years.
The annualized sales rate for November is expected to be 13.4 million, according to economists polled by Reuters.
This will be the best showing since August 2009, when the U.S. government launched its “cash for clunkers” auto rebate program. If projections hold, November will be the third straight month the annualized sales rate will top 13 million.
November sales were also buoyed by brisk pickup truck sales spurred by lower fuel prices and greater demand from business owners, analysts said.
The improved performance comes as the industry recovers from the March earthquake in Japan, which triggered vehicle shortages that hollowed out dealer inventories and depressed sales during the summer.
“Our dealer checks this month suggest that inventories are no longer a constraining factor on auto sales, as the ‘v-shaped’ recovery following the Japanese earthquakes and tsunami essentially has run its course,” Jefferies analyst Peter Nesvold said in a research note.
But Nesvold warned the recent flooding in Thailand could hurt Japanese automakers’ production, which would hurt inventory levels in a more muted manner in months to come.
Other analysts cautioned that the recent performance of U.S. auto sales, which comes amid mounting concerns about the health of the U.S. economy, may be a function of so-called “deferred demand.”
“While sales are strong now, we are still witnessing the deferred demand from the summer months, so we cannot expect this sales level to be considered the new normal,” Edmunds.com analyst Jessica Caldwell said.
Without this boost, the U.S. sales rate would hover around 13.1 million, he added. Honda and Toyota could capture a combined 23.5 percent of the U.S. market in November, up from 20 percent in October.
Analysts expect Toyota’s U.S. market share to be 13.5 percent, the highest since April, before the earthquake effected supply.
U.S. automakers General Motors Co (GM.N) and Ford Motor Co (F.N) are expected to maintain its share of the U.S. market, where automakers are expected to sell around 12.7 million vehicles this year, according to J.D. Power and Associates and LMC Automotive.
“We feel good about November from an industry perspective,” Ford sales analyst Erich Merkle told reporters this week, adding that industry sales were supported by higher demand for pickup truck sales by business owners.
Incentives offered by the Detroit automakers rose $241 largely due to deals on pickup trucks, Johnson said. These deals, coupled with a drop in fuel prices, helped boost demand for pickup trucks, which have sold well this fall.
Nesvold described GM and Ford incentives as “highly surgical.”
“Industry-wide incentives trended modestly higher in November, which paralleled improvements in dealer availability,” Nesvold wrote. “That being said, incentives aren’t increasing as quickly as many feared just three to six months ago.”
Deepa Seetharaman reported from Detroit; additional reporting by Bernie Woodall in Detroit