Automakers have posted their sales figures for November. Besides revealing impressive auto sales growth for most of them, the reports also found an ironic silver-lining in the wake of superstorm Sandy: economic stimulus.
Auto sales brisk in November
Nearly all automakers posted impressive sales growth in November, with General Motors being the notable exception. Volkswagen’s sales, calculated on an annual basis, rose by 29 percent. Chrysler’s sales grew by 14 percent. Honda was up by 39 percent.
Detroit-based LMC Automotive expects, once the dust has settled, that auto sales for November will reach more than 15 million. That is the highest seen in more than 4 years, and higher than the current annual rate of 14.3 million.
GM the straggler
GM, however, saw only a modest 3 percent increase in its sales. Consequently, the company is now sitting on a large inventory of unsold pickups. In October, GM sales grew just 4 percent, badly trailing the industry average of 14 percent.
While other automakers offered larger-than-normal buyer incentives to decrease inventories, GM has kept a tighter rein on its purse-strings. According to Buffalo News, it was offering only $500 off of 2013 trucks, while its competitors offered much deeper bargains to late buyers.
The news site said that large incentives can hurt a brand’s image and resale value, prompting GM to be stingier than others. However, some industry experts believe the automaker will be forced to increase incentive next month, in an effort to thin out its stock.
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‘Perverse’ consequence of Sandy
Auto sales have been robust all season, with consumer confidence on the rise and auto financing readily available. But those sales got an extra boost last month as an unexpected consequence of superstorm Sandy’s devastation.
Economist Diane Swonk likened it to a perverse irony.
“We have an extraordinary storm like this that hits such a populated area. It does make a dent in economic activity but then subsequently there is a stimulative effect,” she told ABC News Radio. “This is a very perverse thing that happens.”
Sandy added 20,000 to 30,000 auto sales in November, estimates Ford. It says most of those sales are from people who had planned to buy in October but held off because of the impending natural disaster.
Analysts also expect sales to be influenced for months to come as storm victims begin to replace vehicles that were destroyed by the storm. According to estimates by GM, 50,000 to 100,000 vehicles were totaled by Sandy.