Holiday Deals Propel November Auto Sales

UPDATED

Automakers capitalized on early holiday shopping with Black Friday car deals that helped propel U.S. sales in November, keeping the industry on pace for a record year.

Even with two fewer selling days during the month, sales are projected to ride Black Friday promotions to the biggest November in 14 years. Kelley Blue Book called for total sales of 1.3 million units. Excluding Mercedes-Benz parent Daimler, the industry has tallied 1.28 million vehicles sold in November, a 1.6% improvement over last year. Daimler is scheduled to report U.S. sales on Wednesday.

Detroit’s Big Three each reported modest sales gains amid unwavering demand for pickup trucks. General Motors (NYSE:GM) sold 1.5% more vehicles during the month, driven by a 10% increase in Chevrolet truck sales. Crossovers and sport-utility vehicles were also strong sellers.

Fiat Chrysler Automobiles (NYSE:FCAU) jumped 3%, and the Jeep brand was the biggest contributor. Jeep sales soared 20%, offsetting declines at Chrysler and Dodge. Ram sales edged 1% higher on an increase in pickup-truck volume.

Ford (NYSE:F) saw its best November truck performance in eight years as sales rose 0.4%. F-Series trucks were up 10%, recovering from a lull earlier this year when Ford plants were ramping up production of the redesigned 2015 F-150. Ford’s truck sales, which surged 18% overall, overshadowed weaker demand in SUVs and cars.

Toyota’s (NYSE:TM) sales turned 3.4% higher. Japanese rival Honda (NYSE:HMC) reported a 5.2% decline. The emissions issue surrounding Volkswagen ignited a 25% loss in November sales for the German brand.

Pricing Defies Holiday Discounts

Despite the onset of holiday deals, pricing continued to tick higher in the penultimate month of the year. The average price for a new vehicle in November rose to $32,966, which was moderately higher compared to the prior month and November 2014.

Jessica Caldwell, a senior analyst for Edmunds.com, said holiday promotions typically put little upward pressure on incentives overall.

“At this time of year, it’s more about promoting and getting your message out rather than the deal itself,” Caldwell explained, adding that automakers have embraced the idea of “Black Friday all month long.”

Ford said it spent less on consumer discounts in November, while its average transaction prices (ATPs) grew $3,800, the largest increase among major automakers.

The company briefly ran a “Friends & Neighbors” promotion that offered discount pricing normally reserved for suppliers, but it ended the program earlier than expected. This week, Ford launched a new sales event for the holidays.

GM also said its incentive spending dropped. According to GM, J.D. Power’s PIN estimates showed that industry-average spending as a percentage of ATPs was 10.5% in November. That is 0.2 percentage points higher versus a year ago but 0.3 percentage points down from October’s level.

As transaction prices and sales volume climbed, automotive revenue reached its highest level for November record. TrueCar (NASDAQ:TRUE) said the industry booked $44 billion in revenue during the month, marking a 3.8% increase.

Revenue Gains

“For the past two months, this growth has been more moderate as incentives increased with extended model year-end promotions in October and November’s early Black Friday campaigns. Even with only slight ATP growth, revenue continues to roll-in for automakers,” said Stacey Doyle, TrueCar’s senior industry analyst.

With November’s sales growth, automakers are now one month away from clinching a record-setting year.

Domestic new-vehicle sales are widely expected to surpass 17 million units for the first time since 2001. Kelley Blue Book believes industry-wide sales will rise 5.6% this year to 17.4 million cars and trucks, which would mark the highest total on record.

A consumer shift to SUVs and crossovers—aided by cheaper gasoline across the country—has supported retail sales for many brands, and some manufacturers have scrambled to keep up with demand this year. The onset of winter weather should provide an extra boost for utilities as the year comes to a close.

“December is normally a big month for trucks, SUVs and luxury. I think that’s going to be another headline,” Caldwell said.