DETROIT — Strong U.S. sales in December capped a remarkable year for the auto industry — especially Japanese brands — and 2013 should be even better.
Sales of new cars and trucks are expected to total 14.5 million after all carmakers announce figures on Thursday. That is 13 percent better than 2011 and the best performance in five years.
In 2012, Americans had plenty of incentive to buy new cars and trucks. Unemployment eased. Home sales and prices rose. And the average age of a car topped 11 years in the U.S., a record that spurred people to trade in. Banks made that easier by offering low interest rates and greater access to loans, even for those with lousy credit.
“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.
Year-end deals on pickup trucks and the usual round of sparkling holiday ads helped December sales jump 10 percent to more than 1.3 million, auto pricing site TrueCar.com predicted. That would translate to an annual rate of more than 15.6 million, making December the strongest month of 2012.
Toyota, which has recovered from an earthquake and tsunami in Japan that crimped its factories two years ago, said Thursday that sales jumped 27 percent for 2012. December sales were up 9 percent. Unlike 2011, the company had plenty of new cars on dealer lots for most of last year.
Honda sales rose 24 percent for the year. Nissan and Infiniti sales were up nearly 10 percent as the Nissan brand topped 1 million in annual sales for the first time.
Volkswagen led all major automakers with sales up a staggering 35 percent.
Chrysler, the smallest of the Detroit carmakers, had the best year among U.S. companies. Its sales jumped 21 percent for the year and 10 percent in December. Demand was led by the Jeep Grand Cherokee SUV, Ram pickup and Chrysler 300 luxury car.
But full-year sales at Ford and General Motors lagged. GM’s rose only 3.7 percent for the year, while Ford edged up 5 percent. For December, GM sales rose 5 percent, while Ford was up 2 percent.
GM executives said the company has the oldest model lineup in the industry, yet it still posted a sales increase and commanded high prices for its cars and trucks. The company plans to refurbish 70 percent of its North American models in the next 18 months and expects to boost sales this year.
North American President Mark Reuss said the company won’t give away cars and trucks with discounts like it has in the past, especially when it’s in the midst of its biggest product update ever.
“Give us 18 months and you’re going to see the whole portfolio turned,” said Reuss.
Ford said that even though the fiscal cliff deal raised tax rates on individuals making more than $400,000 and couples making more than $450,000 a year, it doesn’t see a huge impact on auto sales.
Its chief economist, Ellen Hughes-Cromwick, said only 2 percent of new-vehicle buyers have income in that upper tax bracket, and they tend to purchase even if there is a change in their after-tax income.
She said Ford is more concerned about an increase in the payroll tax, which is scheduled to bounce up to 6.2 percent this year from 4.2 percent in 2011 and 2012. That amounts to a $1,000 to $1,500 tax increase per household, she said.
“We will look at that closely because it will crimp spending in the months ahead,” she said.
December featured year-end deals on GM’s big pickup trucks; the company offered discounts of up to $9,000 to help clear growing inventory. The move worked. GM cut its full-size pickup supply by more than 20,000 in December to about 222,000.
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.
The year’s sales of 14.5 million were far better than the bleak days three years ago when they fell to 10.4 million, a 30-year low as the economy tanked and GM and Chrysler went through bankruptcy protection. But sales still aren’t back to the recent peak of around 17 million in 2005.
The Polk auto research firm predicted even stronger U.S. sales for 2013, forecasting 15.3 million as the economy continues to improve. Polk, based in Southfield, Mich., expects 43 new models to be introduced, up 50 percent from last year. New models usually boost sales.
The firm also predicts a rebound in sales of large pickups and midsize cars. All eight of the top manufacturers are strong and introducing new vehicles, and that should bring competition and lower prices in those segments, according to Tom Libby, lead North American analyst for Polk.
But the firm’s optimistic forecasts hinge on Washington reaching an agreement on government debt limits and spending cuts.
WHY CAR SALES ARE STRONG IN THE U.S.
DETROIT — U.S. auto sales hit a five-year high in 2012, as low interest rates, improving consumer confidence and — most important — some great new cars drew buyers into dealerships.
Sales of new cars and trucks are expected to reach 14.5 million for 2012, up 13 percent from the year before. That not quite a return to the boom times of 2005, when sales hit 17 million. But sales are 40 percent higher than they were at the depths of the recession in 2009.
Here are the highlights and lowlights of 2012, and what’s coming from the industry in 2013:
WINNERS: Volkswagen saw a 35-percent jump in sales in 2012, one of the biggest increases in the industry. The new Passat midsize car was the driver, with sales up 413 percent over 2011. Chrysler’s sales jumped 21 percent thanks to strong sales of the Dodge Caravan minivan and the Jeep Grand Cherokee SUV.
LOSERS: Both General Motors and Ford gained sales in 2011 when the earthquake hurt their Japanese competitors. But the Japanese snatched those sales back in 2012, and GM and Ford lagged behind the industry. GM saw a 4 percent sales increase for the year, hurt by weak truck and Cadillac sales. Ford’s sales were up 5 percent after new versions of some of its biggest sellers — the Ford Escape SUV and Fusion sedan — had to be recalled for safety problems. But they still had plenty of bright spots. Car and SUV sales were solid. New models like the Ford C-Max hybrid and the Buick Verano small car were well received.
RISING STOCKS: GM and Ford investors had a happy finish to 2012. Ford’s stock price is trading at more than $13, up 22 percent over the past year. It has climbed steadily since October, when the company announced an overhaul of its struggling European operations. GM’s stock price has jumped 42 percent in the past year and is now nearly $30. The carmaker turned a strong profit over the summer. It also restructured in Europe and has started buying back the government’s stake in the company.
WELCOME BACK, JAPAN: Those who wrote off Japanese carmakers after Toyota’s recalls in 2010 and earthquake-related car shortages in 2011 were wrong. Japanese companies, who struggled after the earthquake, got their U.S. supplies back to normal in the first few months of 2012 and never looked back. Toyota’s U.S. sales rose 28 percent and the Camry sedan had its best year since 2008. Honda’s sales rose 24 percent.
HOT CARS: The Chevrolet Sonic, GM’s first really competitive small car, quickly became the best-selling subcompact in the U.S. last year. Sales hit 81,247. Sales of the Volkswagen Beetle surged 400 percent to 28,654 after a more aggressive, masculine design hit showrooms. The latest version of the Honda CR-V, a favorite family hauler, set an annual sales record of 281,652. The Toyota Prius jumped 73 percent to 236,659 thanks to new wagon, subcompact and plug-in versions.
THINKING SMALL: Small cars were big sellers as gas reached $3.60 per gallon, which AAA said was the most expensive annual average on record. The Ford Focus compact jumped more than 40 percent and outsold Ford’s midsize Fusion. Honda Civic sales jumped 44 percent and nearly outsold the Accord. Sales of the Fiat 500 mini car more than doubled.
PICKUPS PICK UP: After four years of lackluster sales, big pickups started to gain traction late in the year. Home construction began to recover. That directly affects pickup sales because builders feel more confident and replace old trucks. Those trucks needed replacing; the average U.S. pickup is more than 11 years old. Sales of Ford’s F-Series rose 10 percent for the year. Chrysler Ram sales rose 20 percent, and the Toyota Tundra was up 23 percent. Jesse Toprak, vice president of industry trends for the TrueCar.com auto pricing site, said businesses buy trucks when they see new ones on the road. “When a couple of businesses buy, other businesses see this as a ‘go’ sign,” he said.
POWER OUTAGE: Electric cars continued to struggle because of high price tags and worries about a lack of places to charge up batteries. GM cut production of the Chevrolet Volt in the spring and later began offering big discounts to juice sales. The Volt ended 2012 with total sales of 23,461, which was triple its sales in 2011. But the electric Nissan Leaf was up just 1.5 percent to 9,819, far short of Nissan’s goal of selling 20,000 Leafs in the U.S. in 2012.
FISCAL CLIFF: Carmakers don’t expect the tax increase on people making more than $400,000 a year to impact sales. Ford’s chief economist says only 2 percent of new-vehicle buyers are in the top tax bracket. Audi of America President Scott Keogh says the increase won’t cut disposable income enough to hurt luxury sales. He says the average income of an Audi buyer is about $191,000, not in the status-conscious top tax bracket. “We are not what I would call a frivolous, over-the-top vanity purchase,” he said.
The Associated Press