Dec 16, 2013 Philip Burgess
Over the last year, the fortunes have been turning for American automakers. During the Great Recession, the sector encapsulated the struggles many U.S. businesses and consumers were experiencing. Domestic car manufacturers found it difficult to boost sales as foreign competition increased and the demand for American cars declined. Coupled with mismanagement at many enterprises, the lackluster market of past years not only impacted automakers, but lenders as well.
However, the trends have changed, and American automakers appear to have recovered nicely from the depths of the economic downturn, as sales have spiked in recent months. What's especially optimistic for auto financiers and manufactures is the fact that November was such a strong month for the industry.
According to The Associated Press, November is often a slow month for auto sales. Typically, October demand is high, as is December when consumers start to ramp up holiday spending.
The AP cited a number of industry analysts who indicated year-over-year growth in the domestic auto sector was robust. One economist stated that sales jumped 3.6 percent for the month, while another suggested the increase could have been as high as 6.3 percent during November.
Although sales were expected to trend upward last month, the actual sales estimates have trumped many predictions. For auto lenders, that's a good sign, as sales are likely to remain high during the holiday season, which could make for a historically successful year for the American auto industry.
Chrysler sees double-digit spike
Michigan automaker Chrysler led the surging November market, as Bloomberg reported that the firm's monthly sales spiked 16 percent compared to November 2012, accounting for more than 142,000 vehicles sold. That rate of growth was higher than the 11 percent average Bloomberg analysts predicted. It marked 44 straight months of sales increases for Chrysler.
Ford was another big winner last month, as the company's sales rose 7.1 percent.
Industry leaders noted that the reason November sales activity was so high was due to Black Friday promotions and the long Thanksgiving weekend. Automakers stepped up their marketing efforts for the traditionally busy weekend, which helped many dealerships bring in new business. Bloomberg indicated that this year's holiday push has been more proactive than in years past.
For auto lenders, these trends point to a potentially lucrative December. Consumers are more willing to purchase new vehicles, and manufacturers are starting to create more effective promotional campaigns. Both of those trends could prove beneficial for auto financiers.