Industry Market Trends
U.S. Auto Sales Hit 5-Year High in 2012
January 10, 2013
Major U.S. automakers reported strong sales performance in December, raising total sales for 2012 to a five-year high, boosting confidence in the automotive industry, and setting the stage for further increases in demand through 2013. The United States automotive industry posted robust sales increases last month, with buyers purchasing new vehicles at a faster pace on a year-over-year basis. Climbing demand drove up the annual sales rate to a post-recession high, and this trend is expected to continue into the new year. According to automotive-industry tracking firm Autodata, U.S. light vehicle sales - including passenger cars and light trucks - rose to 1.4 million units in December 2012, a 9 percent increase over December 2011. For 2012 as a whole, automakers sold approximately 14.5 million vehicles in the U.S. market, a 13 percent increase from 2011 and the highest annual sales total since 2007. In addition, 2012 also marked the third consecutive year of annual sales increases of at least 10 percent, the first time the industry has achieved such a success streak since the early 1970s. The seasonally adjusted annual rate (SAAR) hit 15.3 million units in December. "There are several reasons car sales did so well last year: pent-up demand, easier credit, fewer foreclosures, more jobs," MarketWatch explains. "But 2012 also brought us a bruising presidential campaign and endless hand-wringing as Washington raced toward the fiscal cliff. Doomsayers, and there were many, even enlisted the Mayan calendar to convince us the end was nigh. None of this makes selling cars easier. And yet, in the face of so much gloom, people bought cars - lots of them - often from companies not long ago given up for dead." Among U.S. automakers, Chrysler Group LLC posted the largest gains, with December sales of 152,367 units, a 10 percent increase over December 2011. In 2012 as whole, Chrysler sold 1.7 million vehicles, a 21 percent gain over total sales for 2011. "Looking back on 2012, we were again one of the fastest growing automakers in the country," Reid Bigland, president and CEO of the Dodge brand and head of Chrysler's U.S. sales, said. "We also recorded 33 consecutive months of year-over-year sales growth and our strongest annual sales in five years." General Motors Co. also saw major improvement in December, with sales reaching 245,733 vehicles, up 5 percent from December 2011 and marking the company's best retail sales month of the year. In total, GM sold 2.6 million vehicles in 2012, nearly 4 percent above the total for 2011. Meanwhile, Ford Motor Co. sold 214,222 vehicles last month, a 1.9 percent increase over December 2011 and the highest selling December since 2006. Overall, Ford ended 2012 with 2.2 million vehicles sold, a 5 percent gain over the company's 2011 total. "More than three years after the federal government's $62 billion auto-industry bailout, Americans had plenty of incentive to buy new cars and trucks in the year just ended," the Associated Press reports. "Unemployment eased. Home sales and prices rose. And the average age of a car topped 11 years in the U.S., a record that spurred people to trade in old vehicles. Banks made that easier by offering low interest rates and greater access to loans, even for buyers with lousy credit." All three of the major U.S. automotive manufacturing companies posted their best sales year since 2007. Among non-U.S. automakers, Toyota Motor Co. reported some of the sharpest increases last year, rebounding strongly from the 2011 earthquake and tsunami that impacted the company's supply chain. Toyota sold 194,143 vehicles in December, up 9 percent from December 2011. For 2012 as a whole, sales reached 2 million, surging 27 percent from 2011. "With sales nearly doubling the increase of a healthy industry, Toyota had a breakout year in 2012," Jim Lentz, president and CEO of Toyota motor sales U.S.A, noted. "Last year, we introduced 19 new or updated models, which accounted for about 40 percent of our sales. As we move into 2013 and the market sees continued growth, we expect to outperform the industry once again with another nine product launches on the horizon." Strong performance in the U.S. automotive market has lifted projections for the next 12 months. According to automotive research and marketing firm Polk, new vehicle sales are forecast to rise 6.6 percent in 2013 to an annual total of 15.3 million vehicles. In addition, North American production volumes are expected to increase to 15.9 million units, a 2.4 percent gain over 2012. "Polk expects continued recovery in the industry in 2013 and 2014, a positive sign for the U.S. economy," Anthony Pratt, director of forecasting for the Americas at Polk, said. "The auto sector is likely to continue to be one of the key sectors that lead the U.S. economic recovery, however, we don't expect to realize pre-recession levels in the 17 million vehicles range for many years. However, our baseline forecast hinges on Washington's ability to draft a budget plan that will avoid $600 billion in spending cuts and tax increases."