Tags: Analysts December US Auto Sales to Bode Well for 2011

Analysts: December US Auto Sales to Bode Well for 2011

Thursday, 30 Dec 2010 12:17 PM

December is expected to be the third straight month that U.S. auto sales hold above 12 million vehicles on an annualized basis, capping a year of gradual recovery for the auto sector, analysts said.

While December alone cannot predict 2011 performance, a full calendar quarter of sales at this pace suggests the recovery could kick into higher gear.

"That's a long way from the 16 million and 17 million sales rates that we experienced for the better part of this decade. But we're coming out of 2010 on an upswing and I think this bodes well for 2011," said Ford Motor Co. sales analyst George Pipas.

Automakers are due to report December U.S. auto sales on Tuesday, Jan. 4.

A key to optimism among industry experts is the rise in retail sales, typically more profitable than bulk fleet sales to companies and rental car agencies.

Fleet and rental sales are expected to make up 19 percent of December sales, below the average of 20.4 percent for that month, according to data from TrueCar.com.

"It's slowly evolving," Morningstar analyst David Whiston said of the recovery. "You did just see the retail (annualized sales rate) creep up. It's not like it shot up half a million units in one month. It's going to be gradual."

TrueCar.com forecast a General Motors December sales gain of 1.9 percent and a 6.3 percent jump for Ford, compared with December 2009 levels.

Global sales leader Toyota Motor Corp. is the only major automaker expected to report a drop — of 11.4 percent — for the month. The company is still reeling from its massive recalls earlier this year, and it may take a few years to refurbish its image, Whiston said.

Economists surveyed by Reuters forecast December auto sales of about 12.3 million on the annualized and seasonally adjusted basis tracked by the industry.

On average, experts expect 2010 industry sales of about 11.5 million vehicles.

From 2000 to 2007, U.S. light vehicle sales averaged 16.8 million a year. But that was before the deepest U.S. economic downturn since the Great Depression and the bankruptcies of General Motors and Chrysler, now managed by Fiat SpA.

Sales fell to 13.2 million vehicles in 2008 and to 10.4 million in 2009, the most anemic sales figure in 27 years.

J.D. Power and Associates expects 2011 U.S. sales to be near 13 million, and some forecasters are as bullish as 15 million.


The blizzard that whipped the U.S. Northeast this week, causing a rash of flight cancellations and traffic jams, likely cut into auto sales for the month, dealers and analysts said.

Some car shoppers who stayed home because of the storm will defer rather than cancel their purchases, several dealers said.

"Nobody decides that they're not going to buy a car because there was a snowstorm on Sunday," Pipas said. "If they needed to buy a car, they're going to buy a car. It's just a question of when, not if."

Many analysts and experts believe the growth in the U.S. population, rising prices for used cars, and the increasing age of vehicles on the road will spur more new vehicle sales next year.

The strength of the recovery will be determined by how swiftly the unemployment rate drops and the availability of credit for car shoppers, industry insiders said.

"The news is full of trade-offs," said Bill Fox, of Auburn, New York-based Fox Dealerships. "Fuel is going higher and there's still a lot of unemployment."

The U.S. Department of Energy forecasts U.S. retail gasoline prices for regular-grade fuel will average $3 per gallon in 2011, up from about $2.80 in 2010.

"All of these things will impact whether next year is (vehicle sales of) 12 million or 13 million," Fox said.

© 2015 Thomson/Reuters. All rights reserved.

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