A story from Mary Ellen Biery, Research Specialist, Sageworks Inc. said auto sales should keep on trucking into 2012, according to some industry experts. And that’s good news for privately owned auto dealers, which are in their second year of double-digit sales growth, according to an analysis of financial statements by Sageworks Inc.
Edmunds.com, a car-shopping website, this week said November’s stronger pace of auto sales reflected shoppers returning to the car-buying market after production shortages tied to the Japanese earthquake. Edmunds also said the trend’s expected to continue into 2012. Year to date, sales of passenger cars and light trucks are up 10.4 percent from a year earlier, according to market research firm Autodata Corp.
“Edmunds.com estimates that the ‘lost’ summer sales could total nearly 300,000 units and that roughly 100,000 have been made up to date,” said Edmunds.com Chief Economist Lacey Plache. “As a result, this mini-bubble should support sales well into the first quarter of 2012. New sources of consumer motivation will then have to emerge in order to maintain the accelerated sales pace.”
Not surprisingly, auto dealers’ sales have also benefited from positives sales trends, which analysts say are driven by pent up demand, discounts and the fact that the average age of a U.S. vehicle is around 11 years, according to auto market research firm Polk.
Sageworks performed a financial statement analysis of privately owned auto dealers and found that average sales have rebounded strongly since 2008 and 2009. Dealers generated a roughly 15 percent sales increase in 2010 over the previous year, and the strength has continued, according to Sageworks’ data. For the last 12 months, sales at the private auto dealers analyzed by Sageworks are an average 15 percent higher than a year earlier.
Several publicly held auto dealers, too, have reported sales increases this year. Sonic Automotive Corp. (NYSE:SAH) said new and used-vehicle sales contributed to its 15 percent increase in sales in the nine months ended Sept. 30. Group 1 Automotive (NYSE:GPI) has generated a 6.7 percent increase in same-store revenues through the nine months ended Sept. 30, compared with a year earlier.
Major auto makers including Ford, Nissan and Chrysler last week reported double-digit increases in November sales, prompting published reports of the industry’s fastest sales pace in more than two years.
Interestingly, hefty discounts and manufacturer incentives helped maintain consumer interest even on Black Friday, said data analytics firm Dataium, which monitors online shopping for autos. Shopper traffic to auto sites was down only about 6 percent from a typical Friday and was far stronger than a year earlier, when online shopping traffic plunged 200 percent, the firm said. “It was surprising,” said Dataium CEO Eric Brown in an interview Wednesday. “There was some conversation in the market and some marketing done prior to [Black Friday] around the idea that Friday would be a good day for consumers to find value, and so some of that worked.”
Aging vehicles are also prompting people to shop, though Brown said many are buying used vehicles as replacements. But he also believes the stronger online shopping traffic for autos is a broader sign about the overall economy – “that consumers are starting to get their legs back as far as confidence about their future,” he said.
Online shopper behavior tracks very closely with sales volume, Brown said, with auto sales typically reflecting shopper traffic trends 30 to 60 days out.
Sageworks, a financial information company, collects and analyzes data on the performance of privately held companies and provides financial forecasting software.
