{"id":69101,"date":"2013-12-23T10:24:46","date_gmt":"2013-12-23T15:24:46","guid":{"rendered":"http:\/\/www.thedetroitbureau.com\/?p=69101"},"modified":"2013-12-23T11:38:07","modified_gmt":"2013-12-23T16:38:07","slug":"december-likely-to-bring-record-spending-on-new-cars","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2013\/12\/december-likely-to-bring-record-spending-on-new-cars\/","title":{"rendered":"December Likely to Bring Record Spending on New Cars"},"content":{"rendered":"
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A new Ford F-150 rolls off the maker's assembly line in Kansas City, Missouri. Strong pickup demand helped boost car sales in 2013.<\/figcaption><\/figure>\n

With millions of dollars of television commercials airing this month and millions more in incentive money on the table, automakers are expected to end the year with a bang, sales expected to be up at least 4% from December 2012 \u2013 with the industry anticipating all-time record consumer spending.<\/p>\n

While new-vehicle sales started off slowly in December, they are expected to finish strong at the end of the month, according to a monthly sales forecast developed jointly by J.D. Power and LMC Automotive.\u00a0 That would be good news for industry planners worried about a recent bulge in dealer inventories that\u2019s already led several manufacturers to trim back production.<\/p>\n

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Stay in the Know!<\/figcaption><\/figure>\n

Consumers in the U.S. are expected to spend more than $34 billion on new vehicles in December, a historic high for the month. That reflects not just the end-of-year sales burst but also record transaction prices, according to the forecast. The optimism was reinforced by a new report from the U.S. Department of Commerce which indicated the U.S. economy was expanding more rapidly than first thought. The Commerce Department now estimates the U.S. economy grew by 4.1% during the third quarter.<\/p>\n

“Strong consumer demand in December is the culmination of another strong year for the automotive industry,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “Retail sales in 2013 are expected to reach 12.8 million, with consumer spending reaching a record $375 billion, a $40 billion increase from 2012.”<\/p>\n

(Despite strong sales, auto inventories are bulging and could kick off an incentives war. <\/em>Click Here<\/span><\/a> for that story.)<\/em><\/strong><\/p>\n

Total light-vehicle sales in December are expected to reach 1.4 million, a 4% increase from December 2012, with an additional, if more modest, year-over-year increase in fleet volume. Fleet share of total light-vehicle sales in December remains below 17% compared to 17.6% for the year as a whole.<\/p>\n

Added up, total light-vehicle sales for 2013 should finish at 15.6 million units. LMC Automotive has increased its total and retail light-vehicle sales forecasts for 2014 each by 100,000 to 16.2 million and 13.3 million units, respectively.<\/p>\n

That\u2019s about in the middle of the range, consulting firm IHS Automotive last week predicting a slightly lower 16.1 million, while other forecasts have offered numbers ranging as high as 16.5 million for all of 2014.<\/p>\n

“The budget deal in Washington is helping fuel a higher level of optimism for the economy and auto sales in 2014,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “December sales faced some challenges early in the month, with some sales pulled ahead in November and winter storms (keeping some buyers away from showrooms, but) they have rebounded well, and the year ahead is set up to edge new-vehicle sales closer to pre-recession levels.”<\/p>\n

(Detroit makers take aim at a revival in import-friendly California. <\/em>Click Here<\/span><\/a> for more.)<\/em><\/strong><\/p>\n

Vehicle production in North America year-to-date through November has increased 5% from the same time frame in 2012, with nearly 700,000 units of additional volume. Even as inventory has increased, production volume in November remained strong at 1.4 million units, a 4% increase from November 2012.<\/p>\n

But there are some concerns that the industry may be turning up production faster than the market can handle.\u00a0 The inventories of General Motors, Ford Motor Co. and Chrysler continued to build and their combined days’ supply climbed from 87 days at the beginning of November to 93 days by the end of the month.<\/p>\n

Schuster said that while it is normal for manufacturers to build up inventory to meet year-end demand, the level is slightly ahead of expectations, and doing so this late in the year has the potential to affect production in the first quarter of 2014.<\/p>\n

Some of the inventory build-up can be traced to dealers ordering pickup trucks and utility vehicles in advance of the planned shutdowns for model change at GM and Ford.\u00a0 But those two makers have also decided to take more downtime at some of their plants this month in an effort to reduce excess inventories.<\/p>\n

\u201cWe\u2019re now on a true turn-and-earn policy,\u201d Mark Reuss, president of GM\u2019s North American operations, told TheDetroitBureau.com.\u00a0 \u201cWe\u2019re running our plants based on what we sold last month.\u201d<\/p>\n

(Foreign-owned makers adding plants, ramping up North American production. <\/em>Click Here<\/span><\/a> for more.)<\/em><\/strong><\/p>\n

In contrast, European and Asian manufacturers all maintained or reduced their inventory levels in November.<\/p>\n

Given the unexpected Detroit Three production push in November, LMC Automotive has increased its volume outlook for 2013 North American production to 16.2 million units, Schuster said.\u00a0 First quarter 2014 production is expected to grow 4.2 million units, a 4% increase, compared with the same period in 2013. Full-year production in 2014 is forecast at 16.6 million units, which would be a 3% increase from 2013.<\/p>\n

Paul A. Eisenstein contributed to this report.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

With millions of dollars of television commercials airing this month and millions more in incentive money on the table, automakers expect to end the year with a bang, sales expected to be up at least 4% \u2013 with the industry anticipating all-time record consumer spending. More from TheDetroitBureau.com.<\/p>\n","protected":false},"author":20009,"featured_media":63532,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[8],"tags":[],"make":[],"post-state":[],"category_old":[151],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/69101"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/20009"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=69101"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/69101\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/63532"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=69101"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=69101"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=69101"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=69101"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=69101"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=69101"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}