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December 31, 2014 01:00 AM

U.S. auto sales forecast to rise 10% in Dec.

Crain News Service
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    By Nick Bunkley, Crain News Service

    DETROIT (Dec. 31, 2014) — December was filled with good reasons for consumers to buy a new car or truck: big discounts, very little snow  — and gasoline prices falling like a rock.

    Forecasters say U.S. new-vehicle sales likely jumped 10 percent for the month, bringing the total for 2014 to 16.5 million, beating even the most optimistic projections from early in the year. Most forecasters are calling for U.S. light-vehicle sales to hit 17 million in 2015, a threshold the industry hasn't since seen 2001.

    “What a way to close out this blockbuster year for the industry,” John Krafcik, president of TrueCar, said in a statement. “With the strongest demand in a decade, gains in highly profitable segments and modest incentive growth, auto makers should be grinning as they close the books this year.”

    Auto makers still have until Friday, Jan. 2, to complete sales transactions that count toward 2014. They'll report December sales on Monday, Jan. 5.

    At Sunnyside Toyota in North Olmsted, Ohio, sales since Christmas were up 26 percent from the last week of 2013, General Manager Mike Cuva said Tuesday. He said the RAV4 crossover was the dealership's top seller this month.

    “The week between Christmas and New Year's is a week where we do a lot of business for the month, and it hasn't disappointed,” he said.

    Cuva expects the momentum to continue into 2015.

    “We've got a lot of great product coming out,” he said. And since the economy has become more stable, “people are feeling better about buying new cars.”

     

    Forecasts from TrueCar, Kelley Blue Book, Cars.com and LMC Automotive estimate December volume at 1.49 million to 1.51 million units, or 10 percent to 11 percent more than a year ago. Anything in that range would represent the industry's best December since 2004 and second best ever. That translates to a seasonally adjusted annualized selling rate of 16.7 million to 16.9 million, up from 15.5 million in December 2013 but down from November's rate of 17.2 million.

    Through November, auto makers had sold 15,023,111 light vehicles this year, up 6 percent from first 11 months of 2013.

    A 10 percent gain for the industry in December would be the biggest year-over-year increase for any month since May, when sales jumped 11 percent.

    “The prospects for auto sales to overachieve in 2015 are moving closer to reality as 2014 goes out on a high note,” Jeff Schuster, senior vice president of forecasting at LMC, said in a statement. “Economic bliss, driven by job creation, wage growth and low gas prices may drive consumers to showrooms at a faster pace, emphasizing the notion that this recovery may not be over quite yet.”

    LMC raised its 2015 forecast for U.S. sales by 200,000 units to 17 million and for North American production by 200,000 units to 17.4 million.

    According to the forecasts:

    • Ford Motor Co. may post its first year-over-year sales increase since August, though it's still expected to trail the industry average. Ford is just ramping up production of the redesigned F-150 pickup and has been cautious in selling down the outgoing model to avoid shortages. The company has lost U.S. market share every month this year except July.

    • Fiat Chrysler Automobiles is expected to post a year-over-year gain of more than 20 percent for the fifth time in the past six months. Through November, the company had accounted for about one-third of the industry's total volume gains this year, with the majority of that coming from Jeep.

    • Incentive spending per vehicle is up about 6 percent from a year ago but unchanged from November, according to TrueCar. The biggest jump is expected to come from Hyundai-Kia, while Ford Motor Co. and General Motors Co. likely reduced spending compared to a year ago.

    • Subaru, which said it crossed the 500,000 mark for the first time ever in a calendar year on Dec. 29, may post a gain of about 17 percent for December, according to TrueCar. That would result in total U.S. sales of nearly 511,000 for Subaru in 2014 and a full-year market share of more than 3 percent for the first time.

    • Full-size pickup sales will top 2 million units for the first time since 2007. The segment was up 7 percent through November, for a year-to-date total of 1.86 million.

    • Sales of compact SUVs and crossovers, the year's hottest segments, will rise 18 percent in December and gain nearly a full point of U.S. market share, according to KBB.

    _____________________________________

    Reporter Hannah Lutz contributed to this report, which appeared on autonews.com, the website of Automotive News, a Detroit-based sister publication of Tire Business.

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