After three consecutive declines, automakers managed in November to make the largest year-over-year sales gain since February, posting a 3.6 percent gain.
But it took a big jump in incentives to make that happen.
Those heavy incentives -- now amounting to more than 12 percent of the industry's average transaction price -- might be enough for 2016 to topple last year's record by a razor-thin margin. Going into December, U.S. sales were just 6,418 vehicles ahead of last year's pace, an increase of 0.04 percent.
"Everyone's trying to protect their volume and their market share," said Jeff Schuster, senior vice president of forecasting for LMC Automotive. "Incentives are being used to soften the blow of the slowdown, to ease the flattening of the market. Because we're kind of hovering in that record territory, it's easier to pull that lever than if we had a sharp falloff in demand."
November and December have become big months for promotions in recent years. But even by that standard, automakers were unusually aggressive last month, spending $3,741 per vehicle, 21 percent more than in November 2015, according to Autodata.
And unlike many recent months, that money wasn't aimed at clearing out inventories of slow-selling cars; it was largely used to grab more share in SUV, pickup and crossover segments that were already red-hot.
Incentives surged 30 percent on light trucks, nearly triple the 11 percent increase for cars, Autodata said. GMC spent 68 percent more on the Sierra, Ford spent 88 percent more on the Explorer and Toyota nearly tripled incentives on the Highlander. While Sierra and Explorer sales rose just 2.1 percent, Highlander volume surged 67 percent from a year ago to an all-time high.
November incentive spending was nearly $500 higher than the industry's average from January through October.
"There is a point of diminishing returns when whatever you give at the front end in incentives comes off residual values at the back end," AutoNation CEO Mike Jackson told Automotive News last week. "We're right at that tipping point."
Bigger discounts are adding to the positive effects of a strong stock market and declining unemployment -- the national jobless rate fell to a nine-year low last week -- to keep dealerships busy as 2016 comes to a close. Dealers and automakers said the month started slowly as consumers fretted about the presidential election, but it ended up breaking the November record set in 2001.