Automakers’ Holiday Promotions Lift Americans Out of the Doldrums

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It turns out that on-sale winter apparel and Christmas gifts weren’t the only things propelling a torrid Black Friday. U.S. auto sales also came in strong last weekend, helping the industry post satisfying results for the entire month of November. Sales were up 14 percent over a year ago.

And more than that, automakers solidified their status as one of the few genuinely rosy sectors of the U.S. economy, with some car-brand executives suggesting that their industry could actually help lead America out of its current economic doldrums. J.D. Power just announced that car buyers in the U.S. are considerably more satisfied than they were a year ago.

“[Auto] dealers enjoyed the same uplift as other merchants” last weekend, Ken Czubay, Ford’s U.S. vice president of sales, told journalists on a conference call. “That included a strong Saturday.” Ford’s retail sales were up 20 percent for last month over a year earlier, and the company’s largest dealer, Galpin Ford in Southern California, experienced its largest single sales day in history on the day after Thanksgiving.[more]

Volkswagen was planning for a strong close to the month, and last weekend’s surge of activity meant November “ran slightly ahead of our expectations in terms of the overall buoyancy of demand,” Jonathan Browning, CEO of VW of America, told reporters. “It was a good time for consumers to be out shopping for vehicles.”[more]

Like some peers, Browning added that he saw “some positive movements in overall consumer confidence” as well that suggested auto sales could in some sense help carry the U.S. economy upward through the continuing doldrums. The industry’s progress doesn’t represent a disconnect with other discouraging aspects of the economy, he asserted, “if there is some level of confidence at the consumer level [which] you put together with the factors of low interest rates and strong residual values [of used cars] and great product in the marketplace.”

Still, some analysts urged against optimism about presuming the robust 13.6-million annual sales pace from November, seasonally adjusted, would continue even into December or the first quarter.

“The sales that are happening this month, and last month, are deferred from earlier in the year” when many brands were in short supply of small, fuel-friendly vehicles, said Jessica Caldwell, U.S. sales analyst for Edmunds.com. “For the time being, we’re in a bit of a bubble.”

“Consumers have had a deal mentality lately,” she continued. “Right now is when consumers expect good deals, from a $5 item to a $30,000 item” such as a car. Brand and dealer incentives and promotions were heavy leading up to last week. So on Black Friday and the rest of last weekend, Caldwell said, consumers “decided to shop when they saw the deals.”

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