Monday, November 25, 2013

US Automobile Sales Expected to End on a Solid Note in November

The US automobile industry is experiencing the best year post the recession. Automobile sales are expected to rise in the range of 4% to 7% for the month of November compared to last year same period. Several analysts are estimating that the seasonally adjusted annualized rate (SAAR) would cross 16 million, which is the best since August.

LMC Automotive expects the annualized rate to be 16.1 million, the best in six years. This is a decent improvement from last year's November, when the industry reported 15.3 million as the adjusted annualized rate. In comparison, Kelley Blue Book (KBB) expects the November 2013 SAAR to be around 15.6 million, while Edmunds.com estimates it to be 15.7 million.

How strong the sales will be a lot depends on the last week of the month which generally witnesses solid boost from the holiday season ahead. In fact as said by a senior market analyst of KBB rightly "these are some of the best sales days of the year".

So how are individual automakers expected to perform?

The top US automaker General Motors (GM) got a good boost this Black Friday as it introduced its promotional offers on its models of Chevrolet, Buick and GMC. KBB said that it expects to see sales gain of 12% in November, the highest among the top auto giants. Edmunds expects the top Detroit maker to post sales rise of 8%, and estimates Chrysler to report 10% sales gain.

However, foreign automakers including Honda (HMC), Hyundai and Volkswagen (VLKAY) are expected to lose market share in November. One of the prime reasons why these foreign automakers aren't benefitting as much as domestic carmakers is because they do not specialize in pickups and trucks. The Detroit Three, General Motors, Ford (F), and Chrysler are known for manufacturing pickups and trucks. With the rebound in the housing and construction sector, businesses are improving and are therefore demanding more and more of pickups.

This is bolstering the sale of domestic auto giants who are witnessing a sup! erb year. The good news is that the revival of the housing sector is there to stay for at least a couple of years. This would give domestic automakers a real boost, particularly after suffering distressed years post recession. Several industry analysts believe that the industry shall continue to see significant upward trend. The holiday season is ahead and car shoppers have already started taking advantage of the incentives that automakers give during this period.

Solid November

Sales during September and October were disturbed by external factors which suppressed the demand for cars as buyers started losing their confidence in the economy. However, November is expected to end at a solid note. LMC projects that November would post 1.22 million deliveries. If this is the case then the US automobile industry would record the best November since 2003. Automakers are scheduled to post November figures on December 3.

The US automobile industry is estimated to post 15.5 million annual sales, 1 million higher compared to last year. The increase in sales is majorly due to pent-up demand, Toyota's (TM) US Chief Executive Jim Lentz says. Honda's US Chief Executive Tetsuo Iwamura expects that 2014 US sales figure would be in the higher bracket of 15 million. Sales gain is not expected to be as strong as in 2013, though the industry shall continue to be in momentum. 2013 is a dream year for the automakers, it would be interesting to see how 2014 turns out to be.

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