A December to remember for auto sales – or not?

The U.S. auto industry is poised to conduct bold — if involuntary — experiments this month in marketing and inventory management: how to execute the traditional year-end sell-off that consumers have been conditioned to expect when you have very little on hand to sell.

December is typically one of the best months for vehicle sales thanks primarily to two segments: luxury and commercial fleet. But after November yielded another month of deliveries suppressed by dealer inventory shortages, consumers will have trouble finding something on which to place a big red bow, said Tyson Jominy, vice president of data and analytics at J.D. Power.

"If Black Friday weekend is any sort of leading indicator to what we should expect in December, it was pretty soft. So without things to sell and without a whole lot of marketing support already, I don't expect this to be a December to remember for anyone," he said.

Among the seven automakers that reported their November sales this week, Ford Motor Co. was the only one to post a year-over-year gain — up 5.8 percent for its first such gain since May — while the remaining automakers saw their volumes fall in a range from Mazda North America's 5.3 percent to Subaru of America's 35 percent. Collectively, the seven automakers saw their sales decline more than 14 percent from a year earlier. Other automakers didn't report November sales but will report their fourth-quarter results right after the new year begins. November's seasonally adjusted, annualized rate of sales stayed flat from October at 13.1 million, but it still remained well off April's 18.5 million and below the 16.1 million rate in November 2020.

Dealer inventory levels stayed around 1 million vehicles for the third consecutive month, Cox Automotive estimated, as shortages of microchips continued to hamper production and dealers reported quick turn rates on the vehicles they can get delivered to their lots.

"The market is very uneven right now, with some brands, and products, facing greater shortage than others, notably Toyota and Subaru, who reported significant sales drops last month due to tight inventory. Meanwhile, Ford inventory has improved since summer," said Charlie Chesbrough, senior economist at Cox Automotive. "The inventory crisis is going to be with us well into 2022, and we can expect further market share shifts as product availability ebbs and flows."

LMC Automotive analyst Augusto Amorim noted a number of anomalies that showed just how jumbled the market has become as a result of tight inventories. For instance: "Kia outsold Hyundai for just the 10th time in history, and Honda sold more Accords than Civics."

The inventory levels are likely to scramble automakers' traditional year-end sell-off marketing events, says Jominy. Motor Intelligence says marketing and incentive spending is down 23 percent industrywide this year to $39.46 billion and was down 58 percent year-over-year in November to just $1.95 billion.

"If we don't have anything to sell, what can people buy?" Jominy asked. "As a dealer, you should be shifting your advertising support to talk about elements other than the deal; to talk about your ability to find a vehicle that will match a consumer's exact preferences. A lot of dealers now can be talking about preordering, and in some cases, there are incentives for doing so."

November's sales results make it more likely that Toyota Motor North America will finish 2021 as the nation's top-selling automaker, stealing a sales crown that General Motors has held for nine decades. Though GM did not report its November sales, analysts had put it significantly behind Toyota through October as both companies continued to work through chip-related supply shortages. Even though Toyota's November sales were off 25 percent, the Japanese automaker is still up 16 percent for the year to 2,158,146. And it appears to have at least kept its lead over GM heading into December, according to LMC Automotive, which said Toyota is up by more than 120,000 vehicles.

Meanwhile, Ford was doing its own crowing about its November sales, having bested both larger automakers in U.S. sales for the third consecutive month, citing the numbers automakers provide privately to analysts and industry data trackers. The last time Ford had such a streak at No. 1 was 1974, company officials said last week.

The Automotive News Research & Data Center could not independently verify Ford's claim. The automaker remains more than 438,000 sales behind Toyota year to date. Asked to verify or comment on Ford's claim, GM spokesman Jim Cain didn't dispute its veracity but didn't let it pass by quietly, either.

Said Cain of Ford: "I wouldn't rush out and get a 'We're No. 1' tattoo."