Although the U.S. presidential election initially left people surprised at Donald Trump’s unexpected victory and worried about how it would impact the economy, economic confidence quickly returned to the U.S. market, contributing to the auto industry selling vehicles at a rapid pace in November. In fact, thanks to its November numbers, the U.S. auto industry has an unexpected chance to set a new record for yearly sales.
According to Autodata, U.S. auto sales increased by 3.7 percent in November 2016 compared to the same month last year. If taken on an annualized basis, this increase will amount to 17.87 million units sold, which, if December sales stay on track, will break 2015’s sales record of 17.47 million units. Originally, sales growth projections for November ranged from Edmunds’ 2.7 percent to Kelly Blue Book’s 4.2 percent.
“After one of the most contentious elections in the U.S., certainly in my lifetime, the question was what effect may that have on consumer confidence?” said Bob Carter, Toyota’s senior vice president of U.S. automotive operations. “Well, from my perspective, when you look at the strength of November — particularly what took place for us, and I assume the entire industry over the Thanksgiving holiday — consumer confidence is just fine.”
Consumer confidence increased thanks to record stock highs, solid employment, the availability of credit, and a healthy housing market post-election. However, Thanksgiving weekend also had a measurable effect on November’s output.
According to Mark LaNeve, Ford Motors’ U.S. sales chief, “Black Friday has become one of the cornerstone selling events in automotive now.”
Mr. LaNeve’s comments were confirmed by data from TrueCar. Discounts as a share of vehicle price rose 13 percent above last year’s. Industry wide, incentives averaged $3,475 per vehicle this year. Although these incentives are expected to cut into profits as automakers strive to maintain or increase their market share, November 2016 was still very lucrative for the U.S. auto industry.
General Motors’ total sales increased by 10.2 percent in November. It experienced an 8 percent gain in retail vehicles, which generate more profit than sales to fleet customers. All four of GM’s U.S. brands experienced increased sales, with Chevrolet up 8.1 percent, GMC up 14.1 percent, Cadillac up 14.5 percent, and Buick up 16.1 percent. As a result, the company is now ahead of its planned pace for selling its 2016 model-year inventory, which is an indicator of profitability to come.
Increased consumer confidence, in turn, has not only led to increased sales but also to increased purchases of GM and Ford stock, breaking from the pattern of the relative lack of excitement about both companies’ shares in recent years. The price of GM shares rose by 5.5 percent to close at $36.43. Ford’s share price rose by 3.9 percent to close at $12.43.
Like GM, Ford experienced a strong month as its sales increased by 5.1 percent, with retail sales increasing by 10 percent. Sales of its Lincoln brand, known for luxury, rose 19.1 percent.
November’s sales increase not only benefited U.S. automakers, but foreign ones as well. Volkswagen Group’s flagship brand’s gains of 24.2 percent were so strong that the company broke a monthly sales losing streak that started back in 2015 when its emissions scandal made headlines. Toyota Motor, Nissan, and Honda Motor also reported increases in U.S. sales of 4.3 percent, 7.5 percent, and 6.5 percent, respectively, compared to the same time last year. Toyota sold 197,645 vehicles, Nissan 115,136, and Honda 122,924.
One U.S. automaker that did not experience growth in November was Fiat Chrysler. Its sales fell by 14.3 percent, with retail sales dropping by 2 percent. Most notably, it experienced a 42 percent decline in fleet sales, but the company suggests that this reflects its effort to cut less lucrative sales to rental car companies.
Finally, another noteworthy statistic from the month is that sales of crossovers, pickup trucks, and sport-utility vehicles continued to rise at the expense of cars, whose sales declines. Nissan’s sales of crossovers, trucks, and SUVs rose by 22.2 percent for the month, but its sales of cars fell by 5.5 percent. Toyota experienced a 6.2 percent decline in car sales, but sales of the rest of its vehicles increased by 14.7 percent.