Car makers sustain sales with big discounts and occasional TV
DEEP dealmaking wrapped in a holiday bow brought US car buyers back into showrooms in late November, saving a month whose first half was dominated by a nasty political campaign.
“Fifty per cent of the people were convinced the world was going to end no matter what happened” with the presidential election, said Sean Sellers, general manager of Charles Gabus Ford in Des Moines, Iowa. “It took some of those people out of the market” at the start of the month.
Auto makers and dealers drew from a grab bag of holidayseason tricks to sustain sales. General Motors dangled 20 per cent discounts nationwide on its Chevrolet, GMC and Buick brands in November, and luxury auto makers revived annual promotions such as “the Season of Audi” and Lexus’s “December to Remember.” And even though Ford tightened some discounts, Sellers raised his own store’s sales numbers on Black Friday by opening at 5am and offering a 65-inch 4K TV to anyone who bought a new Ford that day.
Total light-vehicle sales probably rose about 3.8 per cent in November, according to the average estimates of analysts surveyed by Bloomberg. After accounting for two extra selling days this November, the annualised rate is projected to drop to 17.7 million vehicles – still above this year’s average – from 18.2 million a year earlier, the strongest month of 2015. The projections reinforce the idea that industrywide sales, while at a high level, have plateaued and become more reliant on incentives.
Analysts’ estimates for individual companies are mixed. With incentives topping US$ 10,000 on some Silverado pickups and Suburban sport utility vehicles, GM is projected to post a solid 9.1 per cent November sales increase. Toyota Motor Corp. may rise 3.4 per cent while other large foreign automakers including Honda Motor Co. log bigger gains. Ford, which cut back on fleet sales compared with last November, may fall less than 1 per cent.
Fiat Chrysler’s US unit is projected to report the biggest decline for the month, about nine per cent, after paring truck incentives compared with October. Estimates vary widely in part because the company has revised its sales history twice in recent months and analysts are using different year- ago figures for November 2015.
Incentives that were introduced in November may ultimately help determine whether 2016 ends up as a record seventh straight year with an industry-wide sales gain. Many of the auto makers’ deals pegged to Black Friday actually run all through November and some stick around the rest of the year.