Jan 07, 2014 Philip Burgess
The end of the year is typically a lucrative period for retailers, as consumers start to ramp up their spending in November and December with the holiday season looming. Often, it's a make or break period for businesses, as robust sales can be the difference between turning a profit or staying in the red for the fiscal year.
For automakers and lenders, the holidays can be equally as important to them as it is the average retailer. Although cars are a big ticket item, strong auto sales in this period are often a sign of a strong economy and confident consumer base.
Data from the Department of Commerce cited by the Los Angeles Times indicated that consumers are ramping up their spending at a solid rate. The source reported that retail sales in November were up 4.7 percent from the same month a year ago. Also, it was an increase of 0.7 percent from October, despite many forecasts predicting just a 0.6 percent increase.
Although many sectors saw robust sales, the auto industry had a particularly lucrative month. According to the source, sales for cars and auto parts jumped 18 percent in November compared to the previous month. Strong spending trends are incredibly important for the nation, as consumer outputs account for two-thirds of economic activity in the United States.
SUV sales strong
According to The Associated Press, sales for sport utility vehicles were especially strong during November. The source indicated that Ford's top sales analyst Erich Merkle stated that SUVs gained two percentage points of overall vehicle market share during November compared to the previous year, an incredible increase.
Now, SUVs account for 15.5 percent of all vehicle sales in the U.S. So far this year, SUV sales have risen 21 percent from last year's total by this point in the year.
The Thanksgiving weekend was a major catalyst behind this growth in sales. The AP noted that more than 25 percent of Toyota's November sales came over the lucrative holiday period, with Black Friday deals attracting consumers.
As the economy continues to strengthen and car sales trend in a positive direction, auto financiers will be well-placed to capitalize on strong consumer spending habits for big-ticket items. The next several weeks could prove to be an extremely active period for new vehicle financiers as consumers across the country ramp up spending.