US car sales heat up in November

Deep discounts and extra selling days boosted US car sales in November, as Black Friday shopping helped reverse three months of year-over-year declines, automakers reported Thursday. GM, the biggest US carmaker, said sales surged 10.2 percent compared to November of last year. Its Chevrolet and GMC brands saw most of the business, with its higher end Buick and Cadillac brands getting sizeable boosts.
Ford sales rose five percent, driven by gains in its retail sales of trucks and SUVs. Sales to rental agencies, commercial operations and government were down nine percent. Toyota reported a 4.3 percent gain, crediting two additional selling days this November compared to last. The company said SUV sales were a highlight, and was optimistic about a strong December.
GM also expressed optimism, saying it was ahead of schedule in selling off its 2016 model year inventory and expected robust December sales. "All economic indicators show significantly improved optimism about the US economy including consumer and business sentiment, which continue to drive a very healthy US auto industry," GM chief economist Mustafa Mohatarem said in a statement. "We believe the US auto industry is well-positioned for sales to continue at or near record levels into 2017."
In contrast, FCA US, the North American subsidiary of Fiat Chrysler, had a dismal November, reporting a 14 percent decrease compared to November 2015. While sales were up 12 percent in its Ram truck brand, all other brands posted double-digit declines, including Fiat and Jeep. And despite the good news overall, the healthy sales may prove costly as carmakers enticed customers with deep discounts, according JD Power. It predicted incentive spending averaging $3,886 per unit, the highest since the record amount set in September.
"It is important to note that in absolute terms vehicle sales remain close to record levels while transaction prices are at record highs," JD Power automotive analyst Deirdre Borrego said in an analysis. "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." GM said its incentive spending in November was 13.7 percent of the average transaction price of a vehicle - above the industry average. The company said its domestic competitors offered even greater discounts, if averaged throughout the year.