Automakers close out 2012 strong as Dec. volume rises 9%; SAAR reaches 15.38 million

VW, BMW, Honda lead gainers; Slower growth seen in 2013; GM, Ford lose share

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Automakers and analysts expect U.S. sales to continue rebounding in 2013, albeit at at a slower pace, with some forecasts as high as 15.6 million light vehicles.

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U.S. light-vehicle sales -- led by Volkswagen, BMW and Honda -- jumped 9 percent in December, pushing the seasonally adjusted sales rate above 15.3 million for the second consecutive month and helping the industry finish 2012 on a high note.

Automakers sold 14.49 million light vehicles in the U.S. market last year, up 13 percent from 2011, for the highest mark since 2007. It was the third-straight annual gain of at least 10 percent, the first such industry streak since 1973.

"If you want to hang your hat on something that's really improved in our industry, it's the North American auto business," said George Magliano, senior principal economist for IHS Automotive in New York. "It's a shining piece of U.S. manufacturing."

Automakers and analysts expect U.S. sales to continue rebounding in 2013, albeit at at a slower pace, with some forecasts as high as 15.6 million light vehicles.

The National Automobile Dealers Association said Thursday it expects 2013 sales to increase by another 1 million units.

"With last year's tax policy extended and government spending cuts likely in future months, there will be a modest expected decline in purchases of vehicles by the federal and other governments, but not serious damage to the large bulk of consumer purchases of cars and trucks as the economy continues to grow," said Paul Taylor, NADA's chief economist.

December's sales pace of 15.38 million fell just shy of November's 15.56 million, which was the industry's strongest month since January 2008.

Pent-up demand, year-end deals, low-rate financing and easing credit terms are driving the industry's sales.

"People are much more confident about jobs; banks and other credit institutions are much more willing to lend," said Mustafa Mohatarem, GM's chief economist. "You're seeing the customer continue to come back into the marketplace."

Compelling new models

Jesse Toprak, chief market analyst for TrueCar, said the latest car and truck models, often equipped with more features, are also compelling U.S. consumers to consider a new-vehicle purchase after several years of austerity.

Cars sales, helped by robust demand for mid-sized sedans, compacts and mini cars such as the Chevrolet Spark, Smart ForTwo, Fiat 500 and Scion iQ, advanced 18 percent last year, outpacing the 9-percent gain in light-truck volume last year.

Large SUVs, compact pickups and large cars were among the segments that lost the most ground last year.

Chrysler, which analysts had predicted would lose market share in 2012, increased annual sales more than any major automaker other than Toyota and Honda, automakers that rebounded sharply from the 2011 earthquake in Japan.

Volkswagen Group's VW brand and Honda Motor Co. led all automakers last month, outpacing the Detroit 3, Toyota Motor Corp., the Hyundai-Kia Group and Nissan Motor Co.

The VW brand -- helped by newer models such as the mid-sized Passat and compact Jetta -- posted a December U.S. sales gain of 35 percent. VW sales for the year rose 35 percent to more than 438,000 units.

December marked the 16th straight month VW's U.S. sales have climbed 22 percent or more.

Jonathan Browning, CEO of Volkswagen Group of America, said the company's sales growth will taper off in 2013.

Toyota Motor Sales reported a 9 percent December sales increase and said 2012 U.S. deliveries rose 27 percent to 2.08 million. It expects more gains in 2013.

"The Passat and Beetle have been in the market for over a year, so we won't get the same step-up as last year," Browning said today. "We do expect to grow faster than the industry in total."

American Honda said sales rose 26 percent to 132,774 units last month, driven by demand for the new Accord, Civic and CR-V.

Healthy retail demand, year-end discounts and a surge in car deliveries helped Chrysler Group report a 10 percent gain in December.

Toyota Motor Sales reported a 9 percent December sales increase and said 2012 deliveries rose 27 percent to 2.08 million.

General Motors' sales rose 5 percent last month and 4 percent for all of 2012. Buick and Cadillac led the December gains, with advances of 5 percent and 12 percent, respectively. Chevrolet deliveries were up 4 percent.

GM cited strong retail demand and higher deliveries of cars, crossovers and pickup trucks for the company's December results.

Ford Motor Co. said December sales rose 2 percent, as the Ford Division advanced 2 percent and Lincoln fell 12 percent. Ford's sales for the year rose 5 percent.

Fuel-efficiency

Last month's SAAR of 15.38 million compares with a rate of 13.6 million in December 2011. The United States averaged 16.8 million light-vehicle deliveries annually from 2000 to 2007, before volume dropped to 10.4 million in 2009, a 27-year low, amid the financial crisis and credit squeeze.

Automakers are benefiting from the introduction of more fuel-efficient vehicles.

GM said it sold more than 1 million vehicles in the United States last year that achieve an EPA-estimated 30 mpg or more on the highway.

Toyota Motor said its hybrid-vehicle volume jumped nearly 83 percent last year, with sales of the expanded Prius family rising 75 percent to 236,000.

Ford said its small car sales soared 29 percent to 316,006 units last year, including 13,309 deliveries of the new C-Max hybrid.

Honda said the Civic set a December sales record of 33,118 units -- up 61 percent from 2011.

Fiat led all Chrysler brands with a 59 percent gain last month, the company said. For 2012, Fiat's U.S. sales of the 500 mini car line more than doubled to 43,772.

December sales rose 26 percent at Dodge and 16 percent at the Ram brand, but Jeep volume slipped for the third consecutive month, reflecting the end of Liberty production in August.

Chrysler's car sales rose 30 percent last month while light-truck deliveries increased 4 percent.

For all of 2012, Chrysler's U.S. sales increased 21 percent to 1.65 million.

Chrysler Group's discounts averaged $3,206 per model last month, among the highest among automakers, TrueCar estimates.

It was the 33rd straight month Chrysler has posted an increase in U.S. sales as the automaker heads towards its third consecutive year of market-share gains. Chrysler's share of U.S. sales stood at 11.4 percent through November, up from 10.7 percent during the same period of 2011.

Hyundai's U.S. sales rose 17 percent in December and gained 9 percent in 2012, CEO John Krafcik said Hyundai sold 59,435 vehicles last month and a record-setting 703,007 units last year.

Ford's small car sales soared 29 percent to 316,006 units last year, including 13,309 deliveries of the new C-Max hybrid. Photo credit: BLOOMBERG

At Nissan Motor Co., December sales slipped 2 percent, with volume at the Nissan brand down 4 percent and Infiniti up 15 percent. For all of 2012, Nissan Motor's U.S. sales rose 10 percent, with the Nissan brand setting a sales record of 1.02 million.

Kia Motors' U.S. sales declined -- for the first time in more than two years -- by 10 percent last month to 39,178 vehicles. The automaker's previous monthly drop was in August 2010, when industry-wide sales results were skewed by numbers inflated a year earlier by the U.S. government's Cash for Clunkers vehicle scrappage program.

Despite the dip last month, Kia sold a record 557,599 vehicles in the U.S. market in 2012, a 15 percent increase over last year.

Healthy streak

U.S. consumers continue to replace cars and trucks that are, on average, the oldest ever on America's roads. The average age of vehicles on U.S. roads is about 11 years, according to researchers at Experian Automotive and R.L. Polk & Co.

"It sure feels a lot better to be selling cars today than a few years ago," Geoffrey Pohanka, president of the Pohanka Automotive Group, told Bloomberg. "The age of the fleet and the attractiveness of a lot of cars that are being designed now are going to help sustain sales going forward."

Pohanka's Washington, D.C.-area dealer group is expanding only a few years after retrenchment. Pohanka closed three Saturn stores and a Chrysler-Dodge dealership as part of the 2009 restructuring of General Motors and Chrysler Group. In 2013, he plans to build a second Honda store in as many years and also will add a new VW dealership.

Sales are also being driven by a steady, though sometimes choppy, economic recovery, despite high unemployment. U.S. gasoline prices have also moderated, providing another boost for automakers.

"The budget compromise reached in Washington this week removes uncertainty and clears the way for full-year light vehicle sales to rise to the 15 million to 15.5 million unit range in 2013," Kurt McNeil, head of U.S. sales operations for GM, said in a statement.

But Ellen Hughes-Cromwick, chief economist for Ford, said today the automaker planned to gauge the impact of higher U.S. payrolls taxes and "how consumers are going to substitute and economize on certain purchases."

GM, Ford, Hyundai-Kia and Nissan lost U.S. market share in 2012, while Toyota, Chrysler, Honda and the Volkswagen Group gained share.

Chrysler Group's discounts averaged $3,206 per model in December among the highest among automakers TrueCar estimates.

Sandy demand

Lingering replacement demand from owners of damaged vehicles and purchases deferred by superstorm Sandy on the East Coast may have boosted vehicle sales by about 50,000 in December, Credit Suisse Group AG estimated in a report late last month.

TrueCar.com estimates industry incentives averaged $2,409 per model in December, up 4.3 percent from November but down 9 percent from December 2011.

GM hiked incentives on its trucks last month after warning it may end the year with more Chevrolet Silverados and GM Sierras than it planned.

At the end of December, GM had 221,649 full-size pickups on hand, almost reaching its year-end target of 200,000 to 220,000. Deliveries of the Chevrolet Silverado rose 6.1 percent to 50,699 in December.

Many luxury brands offered year-end and holiday specials to drive showroom traffic and sales.

In December, Porsche's U.S. sales rose 61 percent. For all of 2012, sales rose 21 percent to a record 35,043 vehicles, topping Porsche's previous peak of 34,693 in 2007.

Porsche executives are looking for another increase in 2013 as the manufacturer moves toward its goal of selling 50,000 vehicles in the United States by 2018.

"We hope to solidify our position as the world's strongest Porsche market," Detlev von Platen, CEO of Porsche Cars North America Inc., said in a statement. "We look forward to the introduction of several new products in 2013, including the Cayenne Turbo S and Cayman this spring."

Brianna Valleskey, Ryan Beene, Amy Wilson and Bloomberg contributed to this report

You can reach David Phillips at dphillips@crain.com.

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