You are here: Home » International » News » Companies
Business Standard

Car dealers dodge doomsday as Black Friday boosts sales

'Vehicle sales are much stronger now than in the spring and summer'

Jamie Butters Keith Naughton & David Welch | Bloomberg 

Black Friday
Black Friday

There’s an exception to the rule that deals don’t drive traffic to brick-and-mortar stores anymore: car dealerships.
 
and Ford Motor reported bigger US sales gains than expected for last month as big rebates and cut-rate financing offers lured buyers into showrooms. While total deliveries dropped for and Fiat Chrysler Automobiles, both curbed shipments to fleet customers and said retail demand was strong.

 
With the US auto industry winding down its first year of shrinking demand since the recession, manufacturers have cranked up incentive spending to clear the inventory that has built up on dealer lots. The automakers have had more leeway to offer big discounts and cheap loans because buyers have been snapping up more sport utility vehicles and trucks, which usually sell for more than the passenger cars that consumers are snubbing.
 
“November and December over the last few years have become a very big merchandising window for the industry,” Mark LaNeve, Ford’s US sales chief, told analysts and reporters on a conference call Friday. Across the industry, spending on incentives increased by $300 to $400 per vehicle last month, he said. “From a discipline standpoint, even though it’s moved up, transaction prices moved up along with it.”
 
Industrywide, November sales ran at an annualised rate of nearly 17.5 million units, outpacing analyst estimates, preliminary data from researcher Autodata show. That’s down from last year’s 17.7 million pace and slower than the blistering clip of the past two months, but still marks one of the better months this year.
 
A finalised figure won’t be available until Monday due to a reporting delay for Nissan Motor, which said an IT system outage would postpone the release of its results.
 
The Japanese automaker estimates its US sales rose about 14 per cent based on preliminary figures, which would be better than analysts’ average estimate.
 
Targetted deals
 
“Vehicle sales are much stronger now than in the spring and summer,” said Jonathan Smoke, chief economist for Cox Automotive, which owns car-shopping websites including Kelley Blue Book. “The boost in sales over the last three months is a reflection of targeted incentive programs working to move confident consumers who are ready to spend.”
 
Honda beat analyst projections thanks to sales surging: by 57 per cent for the Pilot and 25 per cent for the CR-V. Ford said Explorer deliveries jumped 25 per cent, while the F-Series truck line had its best November since 2001.
 
While GM and Fiat Chrysler’s truck and brands had an unusually weak month — total sales were down for GMC, Ram and Jeep — both have been dialling back deliveries to rental-car firms and other fleet customers that tend to be discounted.
 
Closing the books
 
“When we close the books on 2017, GM will show very healthy inventory levels, significantly lower daily-rental sales for the third year in row, and the best year in our history for crossover deliveries by far,” Kurt McNeil, the company’s US vice-president of sales, said in a statement.
 
Toyota Motor posted a surprise 3 per cent drop in November sales, dragged down by a 20 per cent plunge in passenger car deliveries for its luxury brand Lexus.
 

First Published: Sun, December 03 2017. 00:57 IST
RECOMMENDED FOR YOU