Auto sales grow 13%, to highest level in five years
ASSOCIATED PRESS January 3, 2013 8:30AM
U.S. auto sales hit a five-year high in 2012, as low interest rates, improving consumer confidence and — most important — some great new cars drew Americans into dealerships.
Sales of new cars and trucks are expected to reach 14.5 million for 2012, up 13 percent from the year before. That not quite a return to the boom times of 2005, when sales hit 17 million. But sales are 40 percent higher than they were at the depths of the recession in 2009.
Here are the highlights and lowlights of 2012, and what’s coming from the industry in 2013:
Volkswagen saw a 35-percent jump in sales in 2012, one of the biggest increases in the industry. The new Passat midsize car was the driver, with sales up 413 percent over 2011. Chrysler’s sales jumped 21 percent thanks to strong sales of the Dodge Caravan minivan and the Jeep Grand Cherokee SUV.
Both General Motors and Ford lost the market share they gained in 2011 when the earthquake hurt their Japanese competitors. GM saw a lackluster 4 percent increase for the year, hurt by weak truck and Cadillac sales. Ford’s sales were up 5 percent after new versions of some of its biggest sellers — the Ford Escape SUV and Fusion sedan — had to be recalled for safety problems.
JAPAN IS BACK
Japanese automakers struggled with low inventories for much of 2011 after the earthquake hurt supplies. But sales picked up in the first few months of 2012 and never looked back. Toyota’s U.S. sales were up 28 percent and the Camry sedan had its best year since 2008. Honda’s rose 24 percent.
Lots of cars had a big year. Among the standouts: the Chevrolet Sonic, which quickly became the best-selling subcompact in the U.S.; the new Volkswagen Beetle, which was up 400 percent over 2011; the Honda CR-V, which set an all-time annual sales record after hitting the market at the end of 2011; and the Toyota Prius, which jumped 73 percent thanks to new wagon, subcompact and plug-in versions.
Small cars were big sellers as gas reached $3.60 per gallon, which AAA said was the most expensive annual average on record. The Ford Focus compact jumped more than 40 percent and outsold Ford’s midsize Fusion. Honda Civic sales jumped 44 percent and nearly outsold the Accord. Sales of the Fiat 500 mini car more than doubled.
Electric cars continued to struggle because of high price tags and worries about lack of places to plug in. GM cut production of the Chevrolet Volt in the spring and later began offering big discounts to juice sales. The Volt ended 2012 with total sales of 23,461, which was triple its sales in 2011. But the electric Nissan Leaf was up just 1.5 percent to 9,819, far short of Nissan’s goal of selling 20,000 Leafs in the U.S. this year.
Even though the fiscal cliff deal raised tax rates on individuals making more than $400,000 a year, carmakers don’t see a big impact on sales. Ford’s economist says only 2 percent of new-vehicle buyers are in the top tax bracket, and Audi of America President Scott Keogh said the increase won’t cut disposable income enough to hurt luxury sales. He says the average income of an Audi buyer is about $191,000, not in the status-conscious top tax bracket. “We are not what I would call a frivolous, over-the-top vanity purchase,” he said.
GM and Ford investors had a happy finish to 2012. Ford’s stock price is trading at more than $13, up 22 percent over the past year. It has climbed steadily since October, when the company announced an overhaul of its struggling European operations. General Motors’ stock price has jumped 42 percent in the past year and is now nearly $30. The carmaker turned a strong profit over the summer. It also restructured in Europe and has started buying back the government’s stake in the company.
Updated: January 3, 2013 8:32PM
A steadily improving economy and strong December sales lifted the American auto industry to its best performance in five years in 2012, especially for Volkswagen and Japanese-brand vehicles, and experts say the next year should be even better.
Carmakers on Thursday announced their final figures, which totaled 14.5 million — 13 percent better than 2011.
More than three years after the federal government’s $62 billion auto-industry bailout, Americans had plenty of incentive to buy new cars and trucks in the year just ended.
Unemployment eased. Home sales and prices rose. And the average age of a car topped 11 years in the U.S., a record that spurred people to trade in old vehicles. Banks made that easier by offering low interest rates and greater access to loans, even for buyers with lousy credit.
“The U.S. light vehicle sales market continues to be a bright spot in the tremulous global environment,” said Jeff Schuster, senior vice president of forecasting for LMC Automotive, a Detroit-area industry forecasting firm.
Sales were far better than the bleak days after the U.S. economy tanked and GM and Chrysler sought bankruptcy protection. Back then, sales fell to a 30-year low of 10.4 million, and they are still far short of the recent peak of around 17 million set in 2005.
The best part of 2012 came at the end, when special deals on pickup trucks and the usual round of sparkling holiday ads helped December sales jump 9 percent to more than 1.3 million, according to Autodata Corp. That translates to an annual rate of 15.4 million, making December the strongest month of the year.
Volkswagen led all major automakers with sales up a staggering 35 percent, led by the redesigned Passat midsize sedan. VW sold more than five times as many Passats last year as it did in 2011.
Jesse Toprak, vice president of industry trends for TrueCar, said VW has the right mix of value and attractive vehicles and called the company “the force to watch in the next several years in the U.S. market.”
Toyota, which has recovered from the earthquake and tsunami in Japan that crimped its factories two years ago, saw sales jump 27 percent for 2012. December sales were up 9 percent. Unlike 2011, the company had plenty of new cars on dealer lots for most of last year.
Honda sales rose 24 percent for the year. Nissan and Infiniti sales were up nearly 10 percent as the Nissan brand topped 1 million in annual sales for the first time. Hyundai sales rose 9 percent for the year to just over 703,000, the Korean automaker’s best year in the U.S.
Chrysler, the smallest of the Detroit carmakers, had the best year among U.S. companies. Its sales jumped 21 percent for the year and 10 percent in December. Demand was led by the Jeep Grand Cherokee SUV, Ram pickup and Chrysler 300 luxury sedan.
But full-year sales at Ford and General Motors lagged. Ford edged up 5 percent and GM rose only 3.7 percent for the year. For December, Ford was up 2 percent and GM up 5 percent.
GM executives said the company has the oldest model lineup in the industry, yet it still posted a sales increase and commanded high prices for cars and trucks. The company plans to refurbish 70 percent of its North American models in the next 18 months and expects to boost sales this year.
North American President Mark Reuss said the company won’t give away cars and trucks with discounts like it has in the past, especially in the midst of its biggest product update ever.
“Give us 18 months and you’re going to see the whole portfolio turned,” Reuss said.
Even though the congressional deal to avoid the fiscal cliff deal raised tax rates on the wealthiest Americans, Ford said it doesn’t see a huge impact on auto sales.
Its chief economist, Ellen Hughes-Cromwick, said only 2 percent of new-vehicle buyers have income in that upper tax bracket, and they tend to purchase even if there is a change in after-tax income.
She said Ford is more concerned about an increase in the payroll tax, which is scheduled to climb to 6.2 percent this year from 4.2 percent in 2011 and 2012. That amounts to a $1,000 to $1,500 tax increase per household, she said.
“We will look at that closely because it will crimp spending in the months ahead,” she said.
December featured year-end deals on GM’s big pickup trucks. The company offered discounts up to $9,000 to help clear growing inventory, and it worked. GM cut its full-size pickup supply by more than 20,000 in December to about 222,000.
Overall, though, analysts said the industry eased up on promotions such as rebates and low-interest financing. Car and truck buyers paid an average of $31,228 per vehicle last month, up 1.8 percent from December 2011.
The Polk auto research firm predicted even stronger U.S. sales for 2013, forecasting 15.3 million vehicle sales as the economy continues to improve. Polk, based in Southfield, Mich., expects 43 new models to be introduced, up 50 percent from last year. New models usually boost sales.
The firm also predicts a rebound in sales of large pickups and midsize cars. All eight of the top manufacturers are introducing new vehicles, and that should bring competition and lower prices in those segments, according to Tom Libby, lead North American analyst for Polk.
But the firm’s optimistic forecasts hinge on Washington reaching an agreement on government debt limits and spending cuts.