December New Car Sales Bode Well for 2011

Analysts are predicting that the domestic annualized auto sales rate will hold above 12 million vehicles for the third straight month in December.  The full calendar quarter sales results, they say, indicate that the recovery of the auto industry may kick into high gear in 2011.

Ford Motor Company sales analyst George Pipas admits the industry still has a long way to go, but said the uptick in sales is encouraging. He said the 12 million annualized sales rate is “a long way from the 16 million and 17 million sales rates that we experienced for the better part of this decade.” But, he added, “We’re coming out of 2010 on an upswing and I think this bodes well for 2011.”

Automakers will begin reporting on December sales on Tuesday, January 4.

Analysts point to recent increases in retail sales as a sign of better times for automakers. Retail sales are generally more profitable than fleet sales to corporations and rental car companies.

According to, U.S. fleet sales in December are expected to account for only 19 percent of all sales, which is below the average of 20.4 percent for the month.

Morningstar auto industry analyst David Whiston says the recovery will take time.” It’s not like it shot up half a million units in one month.” He said. “It’s going to be gradual.” predicts that General Motors Company will report a 1.9 percent increase in sales this month compared with a year earlier. Ford Motor Company is expected to report an increase of 6.3 percent compared with December of 2009.

Toyota Motor Corporation is the only major automaker expected to report a decline in sales. is projecting an 11.4 percent drop in sales for the world’s largest automaker compared with December 2009. Whiston said Toyota is still feeling the effects of the massive recalls it suffered earlier this year and thinks it may take a few years for the automaker to rebuild its tarnished image.

A recent Reuters’ forecast places December’s U.S. auto sales in a position to reach an annualized, seasonally adjusted rate of 12.3 million units.  During the first seven years of the decade, U.S. light vehicle sales averaged 16.8 million vehicles annually. In 2008, domestic light vehicle sales fell to 13.2 million units. Last year, sales fell to a mere 10.4 million vehicles – the lowest in nearly three decades.

J.D. Power & Associates predicts that U.S. auto sales will climb to around 13 million units, and some analysts have projected the number could climb as high as 15 million vehicles.

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