December may go down as one of 2009's better months for car sales thanks to a late surge by bargain-hungry consumers. Should forecasts hold, the industry is on pace to sell more than 11 million cars on an annually adjusted basis, compared to a pace of 10.3 million a year ago.The surge is driven in part by news that General Motors will soon begin selling Pontiac and Saturn vehicles at deep discounts next month. The brands are two of four makes that GM has jettisoned as part of its restructuring plan, which will focus on four remaining "core" brands -- Buick, Cadillac, Chevrolet and GMC.
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% The Detroit car maker is offering discounts of as much as 46% off the sticker price of remaining Saturns and Pontiacs in dealer stock, The Wall Street Journal reported Wednesday (subscription required). GM will pay dealers $7,000 for each Saturn and Pontiac that is moved into rental- or service-vehicle fleets. Dealers can then sell them at well below sticker price because the vehicles will essentially be used, with the title showing the dealer as first owner.
A 60% jump in activity on car-shopping website Edmunds.com in the waning days of the month suggests sales this month may come in higher than anticipated, with Edmunds estimates showing an 11.7 million seasonal sales rate. That would give the month the highest tally since the "cash for clunkers" rebate program last summer, it said.
The increase in website activity makes sense, said the Edmunds.com Senior Analyst Jessica Caldwell. "There are so many bargain-hunters scrambling to get year-end deals and cash in on the sales tax deduction opportunity that expires on Dec. 31."
History suggests visitor activity translates into sales, Edmunds said. BMW, Ford, Honda and GM's Chevrolet, Pontiac and Saturn brands have seen above average interest in the final week of December when compared to prior weeks in the month. Edmunds noted, for example, that research on Ford (F) and Honda (HMC) increased nearly twofold, while Pontiac and Saturn saw more than 10 times as much activity, attributable to reports about the steep discounts for the orphaned brands.
The increase in consumer interest shows that the auto industry may finally be recovering after a crushing year, Bloomberg News reported. Data compiled by the news agency shows vehicles sales are on target to reach a seasonally adjusted annual rate of 11.1 million, up from 10.9 million in November, marking the second consecutive month of gain.
Still, the industry will likely sell just 10.4 million new cars and trucks, the lowest since 1982, when the country was also mired in recession and also had 36% fewer driving-age adults, according to the Center for Automotive Research in Ann Arbor, Mich., Bloomberg reported.
Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Mich., told Bloomberg he's expecting a slow, fragile recovery next year. "It will be a slow slog," Mikelic said. "With the wind down of brands, GMʼs going to be paying the price, and Ford will benefit."
Ford has gained greater market share in part due to GM and Chrysler's dependence on government bailout money and the Dearborn, Mich.-based manufacturer's increasing reputation for building high quality and desirable vehicles. Ford is on track to show a 25.1% jump in sales compared to a year ago, according to Edmunds.com.
Car Sales Surge in Final Days of 2009