Analysts expect strong November auto sales

Associated Press

DETROIT (AP) — The economic stars are lining up to make November the best U.S. auto sales month in more than four years.

Home values are rising, hiring is up and interest rates remain low. Americans are more confident about the economy than they've been in a while. And that means they're willing to make big purchases.

November sales, when calculated on an annual basis, are likely to be the highest since March of 2008, according to LMC Automotive, a Detroit-area industry consulting firm. Automakers report U.S. sales throughout the day on Monday.

The economy isn't the only thing driving the increase. Superstorm Sandy, which hit at the end of October, forced buyers in the Northeast to postpone purchases until November. Also, people whose cars were damaged by the storm are starting to replace them. And because the average age of a vehicle on U.S. roads is approaching 11 years, people need to replace their car or truck.

"Everything is kind of moving along almost in concert now," says Jeff Schuster, senior vice president of forecasting for LMC.

November, normally a lackluster auto sales month due to cold weather and holiday anticipation, should see sales hit an annual rate of around 15 million, Schuster predicts. That's above the 14.3 million annual rate so far this year.

If sales end up at 15 million this year, it would be a vast improvement over the 10.4 million during the recession in 2009. They would still fall short of the recent peak of around 17 million in 2005.

Foreign-based brands like Hyundai should see the biggest sales increases due to big discounts, says Jesse Toprak, senior analyst for automotive pricing site TrueCar.com. TrueCar estimates that Hyundai and Kia, which were admonished by the U.S. government in late October for overstating gas mileage, raised incentive spending by nearly 30 percent. Nissan spending was up 45 percent, while Toyota spending rose 9 percent from a year earlier.

Most analysts say they are seeing little sales impact from the "fiscal cliff" negotiations between Congress and the White House. The term refers to sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit. Economists say that those measures, if implemented, could push the U.S. economy back into a recession.

Schuster says the fiscal cliff and a possible recession are one of the risks that could derail the auto sales recovery next year.

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