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DETROIT — People are finally replacing the cars and trucks they held onto during the economic slump, giving a boost to sales at Chrysler, GM and Nissan in November.
Chrysler's sales rose 45 percent from a year earlier, while GM's climbed 7 percent and Nissan's 19 percent. The three companies were among the first to report U.S. sales of new cars and trucks on Thursday.
Dealers say they've had strong floor traffic all month, with surprisingly high sales for a month that's normally lackluster because of colder weather and holiday distractions. But this November, buyers went to showrooms because of good deals on leases, more confidence in the economy and a need to trade in older cars, says Ryan LaFontaine, a partner in a six-dealer chain in Michigan.
The activity underscores projections that Americans bought new cars at the fastest pace in more than two years as they replace aging vehicles. Analysts expect that the annual sales rate for November could range between 13.3 million and 14 million cars and trucks. That is far better than the rate of 12.6 million through the first 10 months of the year.
November sales also could approach the 14.1 million annual rate from August of 2009, when the government offered big rebates for drivers to trade in their gas-guzzling clunkers.
Sales at Chrysler Group LLC last month were led by the Jeep Compass small SUV, which had a nearly ten-fold increase in sales. Jeep brand sales rose 50 percent, while Chrysler brand sales nearly doubled on strong demand for its 200 and 300 sedans. But Chrysler also raised its incentives to nearly $3,300 per vehicle, up 6 percent from October.
At General Motors Co., buyers snapped up small cars and pickup trucks. Sales of the Chevrolet Cruze compact rose 54 percent, while the Silverado pickup, GM's top-selling vehicle, saw sales jump 34 percent.
"We are seeing a broad spectrum of customers return to the market," says Don Johnson, GM's U.S. sales chief.
At Nissan, the tiny Versa led sales with a 38 percent increase, but SUV and truck sales also rose 32 percent.
People have been holding onto their vehicles in an unstable economy, and the rate of cars that are scrapped has surpassed sales for several years. The average age of a car on U.S. roads is a record 10.6 years, according to the Polk auto industry research firm.
The sales increases at the three car companies also reflect consumer confidence for November, which rose to the highest level since July, according to the Conference Board. October's number was the lowest since the recession.
With the increased confidence, car buyers are releasing pent-up demand, said Larry Dominique, executive vice president of data for the TrueCar.com automotive website. "I think consumers are just starting to say 'it's time to start spending money again,' " he said.
TrueCar expects November sales to be nearly 12 percent higher than a year earlier, capping six months of sales gains compared with the same month in 2010. Last November, the annual sales rate was only 12.3 million as the auto industry was just starting to recover from the economic meltdown.
Sweet lease deals, helped by low interest rates and high used-car values that make leased vehicles worth more when they're returned, also are fueling sales. GM, for instance, is offering a Cruze lease $169 per month for 39 months. According to TrueCar, the average industry spending on incentives such as leases and low-interest loans was $2,534 per vehicle in November, up 2.5 percent from October.