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Carmakers are experiencing a spike in car orders in the wake of Hurricane Sandy, which hit the East Coast in October, as people replace wrecked vehicles. Photo: AFP

US auto sales hit fastest pace since January 2008

Toyota
AFP

US auto sales posted their fastest clip since January 2008 amid an improving economic outlook and demand for replacement vehicles following the devastating Hurricane Sandy.

Total industry sales in November were up 15 per cent from a year earlier and came in at an adjusted, annualized rate of 15.5 million vehicles, according to Autodata.

Honda led the pack with a 39 per cent gain that drove its best ever November results. Rivals Chrysler, Ford and GM managed to post their best Novembers in years with more modest but still solid growth.

Still, some expressed concerns the auto industry’s strong recovery from the financial crisis of late 2008 could be hampered by the looming ’fiscal cliff’ with Washington at a political impasse over addressing the budget deficit.

"Exactly how much growth we can expect next year will depend in part on how Congress and the president resolve the fiscal cliff issue,” GM sales chief Kurt McNeil said in a conference call.

"Consumers hate uncertainty, so an agreement on ways to reduce long-term federal budget deficits could remove an impediment to growth.”

While GM could lose some sales to government fleets as a result of budget cutbacks, McNeil said the bigger concern is the impact on businesses and consumers.

Most economists fear the fragile US economy could dip back into recession if Republicans and Democrats fail to reach a deal and mandatory tax increases and massive budget cuts are triggered.

Ford said the political fight has had a limited impact on auto sales so far.

“It’s on the front page of every newspaper but when you take the other side of the story -- the aging fleet, the value proposition, and low interest rates -- the overall spirit of consumers going into the showroom shows that business is still going to be quite good,” said Ken Czubay, head of Ford sales.

Ford estimated that November’s sales saw a boost of 20,000 to 30,000 vehicles as a result of Hurricane Sandy.

Ford economist Jenny Lin forecasted that the storm will continue to drive sales in December and January as much of that gain was from sales delayed by the storm and thousands of damaged vehicles still need to be replaced.

“We do think this is an industry that is growing stronger even without the Sandy effect,” she added.

Ford posted its best November since 2005, as sales rose six per cent to 177,673 vehicles. The results were driven by strong demand for its small cars, which posted their best November in 12 years.

Toyota sales were up 17 per cent at 161,695 vehicles.

“Replacement of vehicles damaged or destroyed by Hurricane Sandy is partially responsible for strong sales,” said Bill Fay, manager of the group’s Toyota Division.

“However, pent up demand, record low finance rates and exciting new products are also driving demand.”
Chrysler’s sales grew by 14 per cent to 122,565 vehicles for the best November performance since 2007. It has now posted 32 consecutive months of sales gains and its sales are up 22 per cent for the year to date.

“Even with all the talk of a looming fiscal cliff, Chrysler Group is well positioned for a strong sales finish to the year,” said sales chief Reid Bigland.

“We are expecting a strong December as the industry continues to recover from the East Coast hurricane and consumers continue to respond to our popular year-end Big Finish event.”

Honda also expressed hope for the future as it celebrated record November sales of 116,580 units which helped push its sales for the year to date up 24 per cent.

“We are now surpassing sales records set pre-recession, a true sign that our business has recovered,” said John Mendel, head of sales at American Honda. “We’re ready for a strong finish to 2012.”

GM sales rose by a modest three per cent to 186,505 vehicles but it remains the automaker’s best November performance since 2007.

The largest US automaker said one reason it fell behind is because its competitors have a larger presence in the East Coast and were able to reap more gains from the post-hurricane recovery efforts.

It also cited the costly incentives its rivals were offering customers and noted that its average transaction price is among the best in the industry as its market share fell to 16.3 per cent from 18.1 per cent in November 2011.

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