December auto sales slow a bit, but 2013 heading for best numbers since 2007

DETROIT – December U.S. auto sales slowed a bit from the brisk pace earlier this year, but automakers still were on target to finish 2013 with the best numbers in six years.

Chrysler managed a 6 per cent gain for December, but General Motors, Toyota and Ford and Volkswagen each posted disappointing numbers. Still, most major automakers reported at least a 7 per cent increase for 2013, and analysts expect full-year sales to be up around 8 per cent to 15.6 million when all the numbers are in. That would be the highest sales figure since 16.1 million in 2007.

“The auto industry was a consistent bright spot in the economic recovery throughout 2013,” Bill Fay, Toyota division group vice-president, said Friday in a statement. “We expect the economy will continue to gain strength in 2014, with car sales rising to pre-recession levels.”

But analysts say discounts rose in December, and there were signs that automakers were beginning to lower prices to match competitors and woo customers. That could mean better deals in the coming year, especially on pickup trucks and midsize cars.

GM’s December sales were off more than 6 per cent as sales of its top-selling model, the Chevrolet Silverado pickup, fell 16 per cent. Toyota sales were down 1.7 per cent from a year ago, while Ford sales were up only 1.8 per cent for the month. Volkswagen, which has struggled all year, saw sales fall 23 per cent.

GM’s pickup truck sales apparently fell victim to heavy discounts that Ford offered on its F-Series, which posted an 8 per cent gain in December. Chrysler’s Ram pickup also posted a large gain at 11 per cent.

For the full year, though, Ford led all major automakers with an 11 per cent gain to almost 2.5 million vehicles. Chrysler sales were up 9 per cent to 1.8 million cars and trucks, while GM sales rose 7 per cent to 2.8 million. Toyota sales were up 7 per cent to just over 2.2 million cars and trucks. But the VW brand struggled, with sales falling 7 per cent to nearly 408,000.

Analysts expect automakers will need to work harder this year to maintain sales momentum. Auto sales have risen by more than a million vehicles per year since 2009, when just 10.4 million cars and trucks sold. But some analysts expect growth to slow to as little as 400,000 this year, with total sales around 16 million.

That should be good news for shoppers: automakers likely will offer deals to protect or increase market share.

“We think there’s going to definitely be more competition,” said Larry Dominique, president of Automotive Lease Guide, a company that tracks lease costs and car prices.

As a result, Dominique said, consumers should look for more bargains, especially on pickup trucks and midsize cars.

For December, analysts had predicted sales of around 1.4 million new cars and trucks, expecting consumers to take advantage of year-end closeouts, low interest rates and sweet lease deals. But Black Friday deals may have pulled some sales into November, and a series of big storms last month may have kept a few car buyers at home.

Dominique also thinks the pent-up demand that has driven sales is starting to ease. People have been replacing cars and trucks they kept through the recession and the slow recovery. The average age of a vehicle on U.S. roads today is a record 11.4 years, according to the Polk research firm.

In December automakers raised rebates and other incentives as they pushed to make year-end sales goals. Average incentives were up 4 per cent compared with a year ago to $2,676 as Ford, Hyundai/Kia and Honda led the way with sweet deals, according to the TrueCar.com auto pricing site.

Ford raised incentives a whopping 22 per cent last month as it sparred with Chevrolet and GMC over pickup truck sales and battled for small-car buyers, Dominique said. Hyundai/Kia incentives were up nearly 18 per cent, while Honda raised its deals by almost 15 per cent, according to TrueCar. Ford Focus buyers, for instance, could get as much as 25 per cent off the sticker price, according to Dominique. Only Chrysler, which traditionally has had high incentives, cut them in December, by 9 per cent.