12/3/2014
By Jennifer Coombs

It certainly appears that US auto sales are back in the driver’s seat of life after posting very strong sales for the month of November. Overall, vehicle sales increased by 4.2% in November to a seasonally adjusted annual rate (SAAR) of 17.2 million units, which is outside the top end of consensus’s estimate for 17.0 million units. Sales for domestic (North American-made) vehicles were especially strong at 14.0 million SAAR; also outside the top-end of analysts’ forecasts. Additionally, sales of foreign-made vehicles increased to a 3.3 million rate from 3.2 million. This is an especially strong gain for the motor vehicle component of the November retail sales report; in October, the component increased by 0.5% even though sales were weak, so November’s number should be particularly strong. The chart below shows that the annualized rate has reached levels comparable with pre-recession sales, and it’s the best pace in years. 

Five of the top six automakers overall sold more vehicles than expected thanks to a surging economy, heavy discounting and falling fuel prices, all of which lured consumers into showrooms. Black Friday’s sales last week gave November sales the final surge they needed to beat last month’s rate. The two major US automakers, Ford (F) and General Motors (GM), reported month-over-month changes of -1.8% and +6.5% respectively. The biggest winner so far is Chrysler, which reported growth of 20.1% over last month and 15.7% over the same month last year courtesy of its star brand, Jeep. Ford’s management said that its monthly decline was expected as it is working to increase availability of its redesigned 2015 F-150 pickup, the redone Mustang and the new Transit commercial van.

Among the biggest foreign automakers, the most winners were clearly in Japan: Toyota's overall sales were up 3% from a year ago; Honda gained 4.6%, but Nissan was off by 3.1%, though that was still better than expected. Propelled by sales of the refreshed Jetta compact sedan and redesigned Golf line, German automaker Volkswagen continued its sales turnaround after months of declines, up by 8.9% over last year. Mercedes-Benz also increased by 2.0%, and Audi increased by a whopping 22.0% over last year. The only loser in the group was BMW, which was down by 0.8% over last year.

Luxury brands were still a bit mixed as Porsche and Lamborghini posted increased sales while Bentley and Jaguar/Land Rover saw sales decline over last year. 

Jennifer Coombs
Wall Street Strategies

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