Car Dealers Dodge Retail Doomsday as Black Friday Buoys Sales

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(Bloomberg) -- There’s an exception to the rule that Black Friday deals don’t drive traffic to brick-and-mortar stores anymore: car dealerships.

Honda Motor Co. and Ford Motor Co. reported bigger U.S. sales gains than expected for last month as big rebates and cut-rate financing offers lured buyers into showrooms. While total deliveries dropped for General Motors Co. and Fiat Chrysler Automobiles NV, both curbed shipments to fleet customers and said retail demand was strong.

With the U.S. auto industry winding down its first year of shrinking demand since the recession, manufacturers have cranked up incentive spending to clear the inventory that has built up on dealer lots. The automakers have had more leeway to offer big discounts and cheap loans because buyers have been snapping up more sport utility vehicles and trucks, which usually sell for more than the passenger cars that consumers are snubbing.

“November and December over the last few years have become a very big merchandising window for the industry,” Mark LaNeve, Ford’s U.S. sales chief, told analysts and reporters on a conference call Friday. Across the industry, spending on incentives increased by $300 to $400 per vehicle last month, he said. “From a discipline standpoint, even though it’s moved up, transaction prices moved up along with it.”

Industrywide, November sales ran at an annualized rate of nearly 17.5 million units, outpacing analyst estimates, preliminary data from researcher Autodata Corp. show. That’s down from last year’s 17.7 million pace and slower than the blistering clip of the past two months, but still marks one of the better months this year.

A finalized figure won’t be available until Monday due to a reporting delay for Nissan Motor Co., which said an IT system outage would postpone the release of its results.

The Japanese automaker estimates its U.S. sales rose about 14 percent based on preliminary figures, which would be better than analysts’ average estimate.

Targeted Deals

“Vehicle sales are much stronger now than in the spring and summer,” said Jonathan Smoke, chief economist for Cox Automotive, which owns car-shopping websites including Kelley Blue Book. “The boost in sales over the last three months is a reflection of targeted incentive programs working to move confident consumers who are ready to spend.”

Related: For Mercedes, Sealing U.S. Luxury Sales Crown Will Be a Cinch

Honda beat analyst projections thanks to SUV sales surging: by 57 percent for the Pilot and 25 percent for the CR-V. Ford said Explorer deliveries jumped 25 percent, while the F-Series truck line had its best November since 2001.

While GM and Fiat Chrysler’s truck and SUV brands had an unusually weak month -- total sales were down for GMC, Ram and Jeep -- both companies have been dialing back deliveries to rental-car firms and other fleet customers that tend to be discounted.

Closing the Books

“When we close the books on 2017, GM will show very healthy inventory levels, significantly lower daily-rental sales for the third year in row, and the best year in our history for crossover deliveries by far,” Kurt McNeil, the company’s U.S. vice president of sales, said in a statement.

Toyota Motor Corp. posted a surprise 3 percent drop in November sales, dragged down by a 20 percent plunge in passenger car deliveries for its luxury brand Lexus.

Volkswagen AG’s combined deliveries for its VW and Audi brands rose 3.4 percent, narrowly missing estimates. While the German luxury brand has recorded 83 straight record sales months, demand dropped for all VW models except the new Atlas and Tiguan SUVs.

©2017 Bloomberg L.P.

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