U.S. Auto Industry Slowdown? Not So, Say November 2016 Sales Results

After the U.S. auto industry reported all-time record sales volume in calendar year 2015, the industry grew by more than 1 percent, year-over-year, in the first-half of 2016.

But since the second-half began, auto sales have trended in the opposite direction. Compared with the July-October period of 2015, sales in the same period one year later were down 2.5 percent. U.S. auto sales declined in August, again in September, and again in October. Since July, year-over-year volume has fallen by nearly 150,000 units, dragging 2016’s year-to-date ten-month tally below last year’s record results.

Yet forecasters say November 2016 will produce a sudden turnaround.

Automotive News reported yesterday on a quartet of forecasts — Kelley Blue Book, Barclays Capital, LMC Automotive, and Edmunds.com — that projected gains of between 3 and 5 percent in November 2016.

A 4-percent uptick would result in 1.37 million light vehicle sales, an increase of roughly 53,000 units compared with November 2015. Not only would that be approximately the same number of sales as the industry collected in October — the industry shrunk 9 percent between October 2015 and November 2015 — but it would be the best November in the auto industry’s history, topping the 1.33 million record in 2001.

Automakers will release complete November 2016 and year-to-date U.S. auto sales tallies on Thursday, December 1. Assuming the forecasters are within range, there were essentially three factors at play that drove auto sales higher in November.

First, the divisive presidential election that some observers and consumers anticipated would result in market upheaval? It’s over. The transition is peaceful, Wall Street did not implode, Ford is still building vehicles in Mexico and Michigan.

Second, because of the ever-quirky auto sales calendar, November 2016 is slightly longer than November 2015. The “November 2016” sales month correlated to the calendar on the back of your office door, stretching from November 1 to November 30. One year ago, “November 2015” did not begin until November 3, shortening the number of selling days by two. Thus, if real auto sales volume grew 4 percent to 1.37 million in November 2016, the daily selling rate will have actually fallen 4 percent.

Finally, automakers are desperately trying to make deals. Incentives through the first-half of the month, at $3,886 per vehicle according to J.D. Power, were 15 percent stronger than in November 2015.

But the battle for market share likely became much more heated in the latter days of the month when Thanksgiving weekend deals involved even higher incentives.

The all-time incentive spend record, $3,939 per vehicle in September of this year, certainly seems in danger of falling as automakers lured customers toward higher-priced vehicles with longer-term loans and attractive lease offers at the end of the month.

“Black Friday may be over,” Chevrolet.com says today, “but the deals continue.”

Timothy Cain is the founder of GoodCarBadCar.net, which obsesses over the free and frequent publication of U.S. and Canadian auto sales figures. Follow on Twitter @goodcarbadcar and on Facebook.