Why car sales raced ahead in November
A combination of falling gas prices, well-thought-of car brands, a recovering economy and Black Friday fanfare apparently made November one of the better months on record in recent years for two of the Detroit Three automakers.
On Tuesday, Chrysler (FCAU) reported U.S. sales of its cars and trucks increased by 20 percent last month, compared to November of 2013, making this the company's best November since 2001.
General Motors (GM) said it had its strongest November in seven years, with total sales rising 6 percent last month compared to a year ago. The company noted demand was "robust" across a wide spectrum of vehicles, from smaller cars and crossovers to its big trucks. And GM executives pointed to a variety of factors for the improvement.
"The buzz around Black Friday helped drive strong showroom traffic but there was a lot more at work in the market," Kurt McNeil, GM's vice president of U.S. sales operations, said in a statement.
"More people have jobs and job security, their wages are starting to increase, household wealth is growing and low pump prices look like they're here to stay through 2015," he added. "All of this helped deliver an exceptional month and it will help keep auto sales at very healthy levels going forward."
Over at Ford (F), overall sales for November were down 2 percent from a year ago. But the automaker said that drop was expected, "as Ford manages its inventory levels as vehicle availability starts growing for the all-new Ford Mustang, F-150 and Transit models." On an up note, Ford reported that November sales of Escapes, Explorers and Mustangs were at record or near-record levels for the month.
November is usually a tricky month for new auto sales. It's a time of retail doldrums as the industry tries to clear the current year's inventory and prepare for the New Year.
But industry observers said this year many consumers looked at the new-car market with fresh eyes, thanks in large part to the Black Friday advertising push.
"Clever advertising from a handful of automakers planted the seed in shoppers' minds that rather in standing in Black Friday lines at retail stores to save tens of dollars, they could instead pocket hundreds and even thousands by taking advantage of deals on cars," Jeremy Acevedo, analyst at the car-shopping website Edmunds.com, told CBS MoneyWatch.
Michelle Krebs, senior analyst at AutoTrader.com, told CBS MoneyWatch she recently did some research and found that in November 2008 (the worst year for car sales, she said, since 1992), the seasonally adjusted annual rate of sales (SAAR) for that month was just over 10 million vehicles. And while the exact figures are not yet in, Krebs expects November 2014's SAAR to come in "well north" of 17 million.
Krebs said she's also struck by the influence several years of Black Friday sales have had on would-be car buyers.
"The buzz is louder than the actual substance of the deals, mostly," she observed. But the stronger-than-expected November sales figures, she added, suggests there's more going on than consumers being lured to holiday shopping promotions.
Lower unemployment levels, along with a stronger stock market and rising housing prices, she said, have all created a "wealth factor" for consumers. At the same time lower gas prices allow for more discretionary income within household budgets. And credit is again becoming available, and affordable, for many Americans.
Added Krebs: "We've come a long way since the Great Recession."