Ahead of the Bell: Strong auto sales seen for '12

December auto sales expected to cap another strong year; sales to keep rising in '13

Associated Press

DETROIT (AP) -- U.S. auto sales likely rose for the third straight year in 2012 as Americans felt more confident about the economy and replaced aging cars.

Carmakers announce their sales for December and the year on Thursday. Analysts expect a strong finish to 2012 and an even better 2013.

Sales of new cars and trucks for the year should total around 14.5 million, 13 percent higher than 2011 and almost 40 percent better than in 2009, when the economy tanked and sales hit their lowest level in nearly three decades.

Last year U.S. unemployment eased, the housing industry started to recover and people felt a bit more confident in the economy. Interest rates also stayed low and banks made loans available to more customers, even those with lousy credit. People began to replace cars and trucks that they'd owned since before the recession. The average age of a vehicle in the U.S. grew to a record 11.2 years.

In 2012, sales of Japanese brand cars rebounded in the U.S. Customers could choose from more Honda and Toyota models because the companies recovered from a 2011 earthquake and had enough vehicles stocked at dealerships for nearly the whole year.

"The U.S. light vehicle sales market continues to be a bright spot in the tremulous global environment," said Jeff Schuster, senior vice president of forecasting for LMC Automotive, a Detroit-area industry forecasting firm.

For December, sales should reach an annual rate of 15.3 million, making it the second-best month of the year after November, according to LMC. The pace of sales remained strong even as politicians in Washington haggled over the so-called fiscal cliff, which could have raised taxes dramatically and caused big government spending cuts.

"There's no evidence so far that this fiscal cliff situation adversely affected December's year-end," said Tom Libby, lead North American analyst for the Polk auto research firm.

Honda was expected to lead all manufacturers last month with a 32 percent rise in sales from a year earlier. Volkswagen also was expected to post big numbers, up 29 percent, according to the TrueCar.com auto pricing website. General Motors' sales were forecast to rise just 1 percent, lagging industry growth as they have for most of the year.

December featured year-end deals on big pickup trucks. GM offered discounts of up to $9,000 to help clear its growing inventory.

Overall, though, analysts said the industry eased up on promotions such as rebates and low-interest financing. Car and truck buyers paid an average of $31,228 per vehicle last month, up 1.8 percent from December 2011.

Polk predicted even stronger U.S. sales for 2013, forecasting 15.3 million as the economy continues to improve. Polk expects 43 new models to be introduced, up 50 percent from last year. New models usually boost sales.

The research firm also predicts a rebound in sales of large pickups and midsize cars. All eight of the top manufacturers are strong and introducing new products, and that should bring competition and lower prices in those segments, Libby said.

But the firm's optimistic forecasts hinge on Washington reaching an agreement on government debt limits and spending cuts.

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