Why car sales are strong in the US

It's not quite boom times for the U.S. auto industry. But it's getting there.
Associated Press
Jan 5, 2013

 

Sales of new cars and trucks are likely to reach 14.5 million for 2012. And if they climb much beyond that, they'll be closing in on a high set in 2005.

Cheap loans, a host of new cars and greater confidence in the economy are drawing buyers into showrooms. Plus, Americans who hung on to aging cars during the recession are ready to trade them in.

Here are the highlights and lowlights of 2012, and what's coming from the industry in 2013:

WINNERS

Volkswagen saw a 35-percent jump in sales in 2012, one of the biggest increases in the industry. The new Passat midsize car was the driver, with sales up 413 percent over 2011. Chrysler's sales jumped 21 percent thanks to strong sales of the Dodge Caravan minivan and the Jeep Grand Cherokee SUV.

LOSERS

Both General Motors and Ford gained sales in 2011 when the earthquake hurt their Japanese competitors. But the Japanese snatched those sales back in 2012, and GM and Ford lagged behind the industry. GM saw a 4 percent sales increase for the year, hurt by weak truck and Cadillac sales. Ford's sales were up 5 percent after new versions of some of its biggest sellers — the Ford Escape SUV and Fusion sedan — had to be recalled for safety problems. But they still had plenty of bright spots. Car and SUV sales were solid. New models like the Ford C-Max hybrid and the Buick Verano small car were well received.

WELCOME BACK, JAPAN

Those who wrote off Japanese carmakers after Toyota's recalls in 2010 and earthquake-related car shortages in 2011 were wrong. Japanese companies, who struggled after the earthquake, got their U.S. supplies back to normal in the first few months of 2012 and never looked back. Toyota's U.S. sales rose 28 percent and the Camry sedan had its best year since 2008. Honda's sales rose 24 percent.

HOT CARS

The Chevrolet Sonic, GM's first really competitive small car, quickly became the best-selling subcompact in the U.S. last year. Sales hit 81,247. Sales of the Volkswagen Beetle surged 400 percent to 28,654 after a more aggressive, masculine design hit showrooms. The latest version of the Honda CR-V, a favorite family hauler, set an annual sales record of 281,652. The Toyota Prius jumped 73 percent to 236,659 thanks to new wagon, subcompact and plug-in versions.

SLOW STARTERS

The new Dodge Dart, a compact that was rolled out with much fanfare last summer, didn't start gaining momentum until the end of the year. December sales were 6,105, or more than double those in August, but still just a fraction of competitors like the Chevrolet Cruze. Sales of the new Chevrolet Malibu were up just 3 percent in 2012. The new Nissan Altima, which has a more dramatic design and a host of advanced features like a lane departure warning system, has struggled in a crowded market. Altima sales were flat or down for three of the last four months of 2012.

THINKING SMALL

Small cars were big sellers as gas reached $3.60 per gallon, which AAA said was the most expensive annual average on record. The Ford Focus compact jumped more than 40 percent and outsold Ford's midsize Fusion. Honda Civic sales jumped 44 percent and nearly outsold the Accord. Sales of the Fiat 500 mini car more than doubled.

PICKUPS PICK UP

After four years of lackluster sales, big pickups started to gain traction late in the year. Home construction began to recover. That directly affects pickup sales because builders feel more confident and replace old trucks. Those trucks needed replacing; the average U.S. pickup is more than 11 years old. Sales of Ford's F-Series rose 10 percent for the year. Chrysler Ram sales rose 20 percent, and the Toyota Tundra was up 23 percent. Jesse Toprak, vice president of industry trends for the TrueCar.com auto pricing site, said businesses buy trucks when they see new ones on the road.

"When a couple of businesses buy, other businesses see this as a 'go' sign," he said.

POWER OUTAGE

Electric cars continued to struggle because of high price tags and worries about a lack of places to charge up batteries. GM cut production of the Chevrolet Volt in the spring and later began offering big discounts to juice sales. The Volt ended 2012 with total sales of 23,461, which was triple its sales in 2011. But the electric Nissan Leaf was up just 1.5 percent to 9,819, far short of Nissan's goal of selling 20,000 Leafs in the U.S. in 2012.

FISCAL CLIFF

Carmakers don't expect the tax increase on people making more than $400,000 a year to impact sales. Ford's chief economist says only 2 percent of new-vehicle buyers are in the top tax bracket. Audi of America President Scott Keogh says the increase won't cut disposable income enough to hurt luxury sales. He says the average income of an Audi buyer is about $191,000, not in the status-conscious top tax bracket. "We are not what I would call a frivolous, over-the-top vanity purchase," he said.

RISING STOCKS

GM and Ford investors had a happy finish to 2012. Ford's stock price is trading at more than $13, up 22 percent over the past year. It has climbed steadily since October, when the company announced an overhaul of its struggling European operations. GM's stock price has jumped 42 percent in the past year and is now nearly $30. The carmaker turned a strong profit over the summer. It also restructured in Europe and has started buying back the government's stake in the company.

LOOKING AHEAD

There's cause for optimism this year because of employment, housing and consumer confidence gains, said Jesse Toprak, vice president of industry trends for the TrueCar.com auto pricing site. Interest rates remain low. Fierce competition is holding car prices in check. And many people simply need to replace their cars, whether they were destroyed by Superstorm Sandy or because they're just getting too old. Toprak predicts that Americans will buy a million more cars this year than they did in 2012. Ford thinks sales could reach 16 million. The most recent high set in 2005 was nearly 17 million.

 

Comments

Mime Bloggling

After being raised in a GM family with both union and non-union relatives, and having bought a new GMC truck right before the Obama bailout debacle and witnessing the UAW bullying and violence the past few years, AND the loss of non-union GM workers pensions, we have pretty much determined we will not EVER buy another GM product or union-made car again. Our next purchase will probably be a Honda.

Otis B. Driftwood

Mime Bloggling, Most of Honda’s worldwide employees are unionized. Guess you never heard of Honda Motor Workers' Union.

Mime Bloggling

Another Obama debacle:

Whoops—'Cash for Clunkers' Actually Hurt the Environment

http://news.yahoo.com/why-cash-c...

"The program's first mistake seems to have been its focus on car shredding, instead of car recycling. With 690,000 vehicles traded in, that's a pretty big mistake.

According to the Automotive Recyclers Association (ARA), automobiles are almost completely recyclable, down to their engine oil and brake fluid. But many of the “Cash for Clunkers” cars were never sent to recycling facilities. The agency reports that the cars’ engines were instead destroyed by federal mandate, in order to prevent dealers from illicitly reselling the vehicles later.

The remaining parts of each car could then be put up for auction, but program guidelines also required that after 180 days, no matter how much of the car was left, the parts woud be sent to a junkyard and shredded.

MORE: The Sweet Smell of Sugar Cane Derived from Fuel

Shredding vehicles results in its own environmental nightmare. For each ton of metal produced by a shredding facility, roughly 500 pounds of “shredding residue” is also produced, which includes polyurethane foams, metal oxides, glass and dirt. All totaled, about 4.5 million tons of that residue is already produced on average every year. Where does it go? Right into a landfill.

E Magazine states recycling just the plastic and metal alone from the CARS scraps would have saved 24 million barrels of oil. While some of the “Clunkers” were truly old, many of the almost 700,000 cars were still in perfectly good condition. In fact, many that qualified for the program were relatively “young,” with fuel efficiencies that rivaled newer cars."

Contango

Subprime loans, discounts and channel stuffing to dealers helped to prop up GM's sales.

At 17%, GM now has the smallest share of the U.S. auto mkt. since 1960.

The U.S. taxpayer still owns about 70% of Ally Bank (the old GMAC).

Obamanomics smoke and mirrors.

Also, the ending of Pres. Obama's payroll tax cut has the automakers concerned. Less money in people's pockets could translate into fewer sales.

http://www.fool.com/investing/ge...

44846GWP

Subprime loan, like your five year, 0% interest?! LMAO!!!

Contango

@ Zippy:

derp

So have you phoned Suzy or Rick and told 'em how you paid current cash for a depreciating asset?

With div'ds, the S&P appreciated 16% in 2012. I like usin' OPM for 0% APR.

Do the "math" :)

http://www.bankrate.com/finance/...

44846GWP

Sorry Winnie, you can't spin your way out of it. You got "took"! LMAO!!

Contango

"Spin" away Zippy. I've still got the cash appreciating - you don't. :)

derp

The Big Dog's back

So only 2% of vehicle sales are made by the top tax bracket. And you on the right are worried about them instead of the other 98%? Go figure.

Contango

@ Dog:

So when are you ditchin' that old Mazda and supportin' Pres. Obama with a new Volt purchase?

Keep propping up those GM sales with subprime loans. Worked out so well for housing didn't it?

It's a pity that Pres. Obama gave workers a 2% tax increase isn't it? Might affect vehicle sales in 2013.

shucks

.

arnmcrmn

http://www.foxnews.com/politics/...

Delaware taxpayers appear to be getting soaked twice under a deal in which the Democratic governor loaned $21.5 million to a hybrid electric carmaker to set up shop in the state. The company has yet to produce a car in Delaware, and taxpayers are footing the electric bill for the idle plant.
The deal was enthusiastically announced in 2009 by Gov. Jack Markell and Vice President Biden -- formerly Delaware's senior senator -- as a way to bring as many as 2,500 green jobs to the state. But California-based Fisker Automotive Inc. has since suffered a series of setbacks that have compounded its shaky financial situation.
"It has not worked out the way he had envisioned," Markell spokeswoman Cathy Rossi acknowledged Monday in a statement to FoxNews.com. "We didn't know and couldn't have known about the underlying technical and financial problems."

More bailout money auto woes.....they just keep piling up....no pun intended.

arnmcrmn

Hey, if you have bad credit and can't buy anything, one can always take a loan out against the title of their car. Most people end up blowing the cash and then do not have a car, but hey.....its Bush's fault right so all is good.

KURTje

Moderators have removed this comment because it contained Personal information.

donutshopguy

kURTje,

Do you mean the migrant workers who's kids are in free daycare supplied by the government. More government money from legal citizens to support illegal aliens. Of course, the free health care, food and housing helps too.

arnmcrmn

I dont work at the muck, but if you are insinuating that every person that works as a migrant worker is illegal, you are highly mistaken. They have the standard deductions taken out of their paycheck just like you are I. They work very hard, long hours and most "white" Americans do want to do these jobs because its to hard, to long and they are to lazy.

The Big Dog's back

It's actually because of the low pay.

Dr. Information

Actually, if you work hard out there you can make a pretty decent paycheck. That is the issue. Long, hard, continuous work in hot summer heat = jobs lazy Americans do not want (white Americans). Ask the farmers, they will tell you. I know all of them very well.

KURTje

Moderators have removed this comment because it contained Personal attacks (including: name calling, presumption of guilt or guilt by association, insensitivity, or picking fights).

KURTje

Sweet. This IS why you can not be a Marine.

jon491

Gomer Pyle was for 5 years.

OMG.LOL.WT_

Oh great guru Contango, give us more of your wisdom on depreciating assets. That's where most of my budget goes. Groceries, we all know what happens to them. Derpity do da

Contango

@ OMG.LOL.WT_:

Actually, the largest part of your "budget" (if you have one) goes to TAXES.

Depreciating assets? Read: "Rich Dad, Poor Dad."

So are you the proud owner of a new GM or Chrysler? And if you are, "hopefully" you weren't dumb enough to pay cash.

OMG.LOL.WT_
Contango

@ OMG.LOL.WT_:

Better add up all your fed, state and local income, sales and property taxes and fees.

And govt. never loses your tax dollars through waste, fraud and abuse?

BTW: In OH "Tax Freedom Day" was 4/12 in 2012. The rest of the yr. ya work for yourself.

So did you buy a new GM or Chrysler?

http://taxfoundation.org/article...

OMG.LOL.WT_

The point of my post was that our economy is based on the general populace spending every cent they can get their hands on. When they don't, the value of your stocks go down. Do I think they (government at all levels) take too much and treat us like idiots? YES Why do you ask what I drive? It WAS against guidelines to give out personal info. I ASSume it still is.:)

Contango

@ OMG.LOL.WT_:

Only a productive society can continue to consumer. Consuming without real economic growth results in excessive debt and a poorer society.

Mr. Bernanke has stated and the Fed is currently manupulating asset (stock) prices by attempting to drive investors into riskier asset classes.

Three things drive stock prices: Supply, demand and speculation.

So you drive a "foreign" car?

I've bought GM for most of my life until last yr. - a "loaded" '12 Nissan Altima 3.5 SR. Still own a '04 LeSabre.

OMG.LOL.WT_

""So you drive a "foreign" car?"" NOYB
""I've bought GM for most of my life until last yr. - a "loaded" '12 Nissan Altima 3.5 SR. Still own a '04 LeSabre."" I don't care.

Contango

@ OMG.LOL.WT_ wrote:

"Oh great guru Contango, give us more of your wisdom on depreciating assets."

You asked, I answered. :)

stephan212

Americans have a way with automobiles.We are so dependent on our automobiles that we can hardly imagine a life without them.Cars and SUVs have integrated into our life to such an extent that we cannot even think of alternative means of transportation.America has always been one of the biggest forum for car sales.Now that the recession has passed people are getting comfy in their lives and looking for social growth that includes getting new cars or replacing their old ones with new ones.

http://www.orangemotors.net/

goofus

Recession has passed LOL Roflmao!!!

steve7876

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