Auto sales best in years, but demand is expected to slow
by Dee-Ann Durbin, Asociated Press and Tom Krisher, AP Auto Writer
January 04, 2014 11:30 PM | 942 views | 0 0 comments | 14 14 recommendations | email to a friend | print
Jeff Caldwell, a chassis assembly line supervisor, checks a vehicle on the assembly line at the Chrysler Jefferson North Assembly plant in Detroit in May 2013. Chrysler finished 2013 with a 9 percent sales increase. The company said Friday it sold more than 1.8 million cars and trucks last year, up from 1.65 million a year earlier. <br>The Associated Press
Jeff Caldwell, a chassis assembly line supervisor, checks a vehicle on the assembly line at the Chrysler Jefferson North Assembly plant in Detroit in May 2013. Chrysler finished 2013 with a 9 percent sales increase. The company said Friday it sold more than 1.8 million cars and trucks last year, up from 1.65 million a year earlier.
The Associated Press
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DETROIT — Automakers are going to have to work a little harder for your business in 2014.

After four years of strong sales increases — and limited discounts — as the economy improved, U.S. demand for new cars and trucks is expected to slow this year. That could mean better deals for buyers as car companies fight to increase their share of the market.

U.S. sales rose 8 percent to 15.6 million in 2013, thanks largely to a surge in pickup truck sales from the home construction and energy industries. For the 32nd year in a row, the Ford F-Series pickup was the country’s best-selling vehicle, with 763,402 sold. The Toyota Camry was the best-selling car with 404,484 sold.

But the industry got a taste of what’s to come when December sales slowed to a crawl. General Motors, Toyota and Volkswagen all saw sales declines as competitors offered better deals, according to TrueCar.com, which tracks car prices. Cold weather and strong sales tied to Black Friday in November also pinched December sales, automakers said. Overall industry sales were flat compared with last December.

A slowdown is inevitable, analysts say. Many people who held on to their cars through the recession have now bought new ones. Those who haven’t may not be in any rush, because cars are lasting longer than ever before. And unless there’s a strong uptick in employment, families aren’t likely to buy an extra car.

Alec Gutierrez, senior analyst for Kelley Blue Book, expects U.S. sales to increase by around 700,000 to 16.3 million in 2014. That compares to increases of more than 1 million each year since 2009, when U.S. sales bottomed out at 10.4 million. U.S. sales peaked at 17.3 million in 2000.

Gutierrez says sales are approaching a natural level of demand for a country with 210 million licensed drivers, especially since people are traveling fewer miles than they used to. Add increasingly competitive vehicles from all manufacturers and you have a buyer’s market, particularly in popular and crowded segments like midsize cars.

“It’s not a forgone conclusion anymore that the Toyota Camry and Honda Accord will be the only players,” he said. “Automakers have invested so much to be so competitive and segment growth just isn’t there. They’re going to have to get creative.”

Jeff Schuster, senior vice president of auto sales forecasting for LMC Automotive, an industry consulting firm, expects annual auto sales to grow in the 1 to 2 percent range through 2015, when sales will plateau.

“We are in what we believe are the final stages of the recovery, which naturally leads to slower growth rates,” Schuster said.

So 2013 could be remembered as the last of the boom years. Last year was the industry’s best performance since 2007, when 16.1 million new cars and trucks were sold.

Ford led all major automakers in 2013 with an 11 percent sales gain to almost 2.5 million vehicles. Chrysler and Nissan posted 9 percent gains. GM, Toyota and Honda each posted 7 percent gains. GM sold 2.8 million cars and trucks in the U.S., compared to just over 2.2 million for Toyota. Hyundai’s sales rose 2.5 percent.

Among smaller automakers, Subaru was a star, with a 26-percent increase in sales. Only Volkswagen struggled, with sales falling 7 percent as its vehicles aged compared with rivals.

Luxury car sales had an especially strong year in 2013, with Mercedes setting a sales record to win the race against BMW and Toyota’s Lexus for the top-selling brand.

“We expect the luxury market will continue to expand in 2014,” said Jeff Bracken, Lexus group vice president.

Holiday lease deals helped close the year on a high note for luxury makers. But non-luxury brands also juiced sales with some deals.

Gutierrez said Honda offered $3,000 in bonus cash to dealers in December for every vehicle they sold beyond their 2012 numbers. That helped the Honda Accord sedan outsell the Camry in December. And Ford said it spent $600 more per vehicle on incentives in December, likely taking aim at GM’s new pickup trucks.

Those are the kinds of tricks buyers can expect to see more of this year, particularly in segments like pickups, where older vehicles like the F-Series are competing with newer models from GM and Chrysler.

On a conference call to discuss December results, General Motors executives made several references to competitors raising discounts to boost sales, especially on full-size pickup trucks. While they pledged to stick to their strategy of selling on value rather than price, U.S. sales chief Kurt McNeil said GM also has to respond to the market.

The average price of a new vehicle in December was $32,890, which was about the same as a year ago, according to Kelley Blue Book.

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