Auto industry ends December, year with best results since 2006
A strong sales pace in December means the industry starts the new year strong, especially given that 55% of the sales were light trucks which tend to net greater profit than cars.
The auto industry finished 2014 strong: the 16.52 million vehicles sold is the best result since 2006, up 5.9%, and marks five consecutive years of growth.
The total was helped by a strong December with a sales pace of 16.92 million compared with 15.52 million a year ago, according to Autodata Corp. Actual sales in December were up 10.8% from a year ago.
It means the industry starts the new year strong, especially given that 55% of the sales were light trucks which tend to net greater profit than cars.
While the conventional wisdom is that the uptick cannot continue forever, the economic factors driving consumers to buy new and pricier vehicles are not expected to let up in the short term. Growth may slow, but is not expected to stall with low gasoline prices and low interest rates in place for the foreseeable future.
“There are a lot of solid factors at play here,” said Alec Gutierrez, senior analyst for Kelley Blue Book, citing oil prices, unemployment below 7% and an increase in consumer confidence.
With oil prices dipping below $50 a barrel, “it is a mental thing,” said Michelle Krebs, analyst with AutoTrader.com. “It is an actual savings. People are not spending as much on gas so there is more money in your pocket.”
December was a strong month for FCA US, the company formerly known as Chrysler, which ended 2014 with a bang as its sales soared 20% in the U.S. General Motors was right on their heels reporting a 19% increase. Ford sales were only up 1% for the month.
For the year, Chrysler was up 16.4% and gained 1.1 points of share to 12.4%. GM sales increased 5.3% for the year and share dipped a tenth to 17.8%. Ford, as forecast, dropped 0.9 points of share to 15% of the market and full-year sales fell 0.6%.,
Toyota sales rose 12.7% in December to 215,057; Honda was up 1.4%; Nissan sales rose almost 7%, Hyundai rose 2.3%, Kia rose 35.6% and Volkswagen was flat compared with the same month a year ago.
For the full year, Toyota sales rose 6.2% to 2,373,771, including its Lexus luxury and Scion brands. Honda was up 1% for the year. Nissan ended the year up 11.1% and VW was down 10% in 2014.
GM sold 274,483 vehicles last month for the company’s best December sales in seven years, and up 19% from a year ago.
“Chevrolet was strong in every segment of the market, from pickups and SUVs to cars and crossovers. Buick and GMC also had strong sales across the board, and our growth far outpaced the industry average,” said Kurt McNeil, U.S. vice president of Sales Operations. “Everything you need to have a great month was in place: Consumers felt good about the direction of the economy, interest rates and fuel prices were low, and our dealers did a great job introducing customers to our incredible range of new and redesigned vehicles.”
The Chevrolet Silverado had a strong month with sales of nearly 58,000 pickups — the best December since 2005. The smaller Colorado sold more than 4,000 units. GM also sold more than 23,000 GMC Sierras.
“Economic bliss, driven by job creation, wage growth and low gas prices may drive consumers to showrooms at a faster pace, emphasizing the notion that this recovery may not be over quite yet,” Jeff Schuster, senior vice president of forecasting at LMC Automotive, said in a recent report.
Ford officials say sales continued to be hurt by the loss of production while the automaker retools the truck plants that make the new F-150 pickup. With a record number of vehicle launches, Ford sales of 2.48 million for the year were flat from 2013.
Ford sales analyst Erich Merkle said low prices were reflected in a slight dip in small car sales and upticks in the sales of full-size pickups and large SUVs.
But Toyota sales were led by a 33% increase in sales of its Corolla compact sedan. Its eight SUV models registered a collective increase of 16% for the month.
And GM saw sales increases in its Sonic and Spark small cars.
Incentives were relatively disciplined in the truck segment while average transaction prices continue to increase, which bodes well for automakers’ continued profitability.
In December, FCA US continued to outperform the industry and capped off, as Kelley Blue Book put it, “an extraordinary year” that included a market share gain of about 1%.
It also was the Auburn Hills automaker’s 57th consecutive month of year-over-year sales increases.
The automaker’s performance in December was driven by a 187% increase for the Chrysler 200 midsize sedan, as well as double digit gains for the Ram 1500 pickup and Jeep Cherokee.
“Our best December sales in a decade pushed our full-year sales over the 2-million unit threshold for our best annual sales since 2006,” Reid Bigland, head of U.S. sales for FCA US, said. “Last year marked our fifth-consecutive year of annual sales growth in the U.S. and, once again, we were the fastest-growing automaker in the country.”
By brand, sales increased 53% for Chrysler, 35% for Ram, 19% for Jeep and 1% for Fiat while sales fell 2% for Dodge. The automaker also reported that it sold 67 Alfa Romeos in December.
“Chrysler has been the surprise,” said Krebs. “Every month we think they can’t do the repeat performance but they do.”
In December automakers normally sell a high volume of cars and trucks because of year-end marketing campaigns and consumers who have more free time to shop.
“Low gas prices, a record stock market and the improving economy are making people feel more financially comfortable, and even the weather has cooperated, for the most part,” Edmunds.com senior analyst Jessica Caldwell said in report last month.
While the pace of sales growth might slow down, automakers will continue to benefit from that same economic environment in 2015.
Industry analysts expects automakers will sell 17 million cars and trucks this year in the U.S., a 3% increase over 2014 totals.
Contact Brent Snavely: 313-222-6512 or email@example.com. Follow him on Twitter @BrentSnavely.