December’s Holiday Auto Sales Expected To Ring In A Rebound Year For The Industry

The U.S. auto industry is on pace to post its best year since the Great Recession, thanks to pent- up consumer demand, cheaper gas and aggressive deal making — and 2015 could be even better.

The industry’s recovery has broad implications. It is a key employer and important driver of economic growth. Auto and auto parts manufacturing employ some 873,000 workers in the United States, according to the Bureau of Labor Statistics. That’s up from fewer than 700,000 during the 2009 auto industry crisis that sent General Motors and Chrysler into bankruptcy and reorganization. The wholesale and retail automotive trade employs an additional 2.2 million Americans, up from less than 2 million five years ago. In all, the sector makes up about 3.5 percent of the U.S. gross domestic product, according to the Department of Commerce.

For automakers, this year’s holiday cheer will be a little more joyful. After U.S. consumers bought 1.3 million new cars, SUVs and light trucks in November, it will only take 1.1 million deliveries in December to match 2007’s new-vehicle sales rate of 16.1 million. Statistically speaking, that’s a done deal. December tends to be one of the strongest selling months of any given year as sellers make their final push to improve annual numbers.

Add to that lower gas prices, rising consumer sentiment and dealership discounts, the strong Black Friday car-buying momentum is likely to roll into December, especially for SUVs, trucks and luxury cars.

“Everything seems to be in place for a strong close [to 2014],” said Bill Fay, a Toyota general manager, during a sales conference call on Thursday.

December is historically a strong selling month, especially for snow-tramping SUVs and light trucks. Coupled with this holiday season’s lower gas prices and higher consumer confidence levels, this holiday car-buying season is likely to be one of the strongest in years, analysts say.

“Pickup trucks and sports utility vehicles are doing well. Utilities in the smaller end continue to be strong,” said Michelle Krebs, senior analyst for Edmunds.com.

Sedans on the other hand, Krebs added, aren’t doing as well as buyers tend to drive off the lots in gas guzzlers when fuel prices decline. Winter weather naturally steers consumers in frostier states toward SUVs. This means buyers looking for December new-car steals should walk past the crossovers and utility vehicles and look to small 2014-model-year fuel sippers like the Ford Fiesta or Honda Fit — and negotiate firmly with the seller.

Meanwhile, “the luxury car market is booming,” said Eric Lyman, vice president of editorial and consulting for TrueCar.com.

Porsche and Audi saw double-digit growth (19 percent and 22 percent, respectively) last month compared to November 2013. Lincoln was up 21 percent while Lexus and Mercedes-Benz saw single-digit growth. Luxury buyers are more likely than others to purchase a car as a gift, so analysts expect growth in the luxury car market this month to be similar to November.

“You tend to see red bows on luxury cars in December,” Lyman said.

Industry watchers expect current market conditions to continue driving sales into next year.

“Promotional activity from the automakers should help close 2014 on a strong note and additional economic support from continued improvement in employment, home prices, and confidence levels along with moderating fuel prices should sustain auto industry momentum in 2015,” IHS Automotive consultant Tom Libby said in an email.