Handing over car keys
U.S. auto showrooms are usually quiet in November. That's due to a combination of factors, including the colder weather (which keeps some folks indoors), the holiday season (which forces many shoppers to prioritize tchotchkes over cars), and of course, buyers patiently waiting for December's year-end deals. But TrueCar suggests that showrooms have been busier than usual this month, and come Thursday, we could be looking at a seasonally adjusted annualized rate (SAAR) of 13.3 million new vehicle sales for the year.
Predictions are that new light vehicle sales for November will ring in around 972,712 units. That would be an 11.5% increase over November 2010, and it would bump up the SAAR by about 100,000 vehicles from the 13.2 million predicted in October. Used car sales are expected to climb, too -- about 1.4% from November 2010.
If TrueCar's analysts are correct, that would mean that the U.S. is on target for the highest SAAR since Cash-for-Clunkers rolled out over two years ago. It would also mean that U.S. automakers will see a fourth straight month of year-over-year sales increases. Leading the pack: the Chrysler brand, which is projected for a year-over-year sales jump of 91.1%
Why the boost?
There seem to be two factors fueling the increase in U.S. auto sales: a growing number of incentives and relatively weak sales earlier in the year.
As for the former, the average incentive for November hovers around $2,534, which is a jump of 2.5% from October. Combined, automakers will spend nearly $2.4 billion this month on incentives for U.S. shoppers. That's pretty enticing.
For the latter, we need look no further than the Tohoku earthquake and tsunami that hit Japan on March 11 of this year. Apart from the widespread damage wreaked on families and communities, the disaster also affected car sales, causing shortages from Japanese-based automakers like Honda and Toyota. Following the law of supply and demand, this led to higher car prices and lower incentives. Now that Japanese auto production is beginning to return to pre-March capacity (well, somewhat), supplies are high and sales are comparatively improved.
Automakers are expected to release official sales stats this Thursday. We'll see if they hold up to TrueCar's predictions.