Auto sales end 2012 on strong note

Strong U.S. sales in December capped a remarkable year for the auto industry — especially for Chrysler and 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 per cent 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 per cent 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.

Good year for Chrysler

Chrysler, the smallest of the Detroit carmakers, had the best year among U.S. companies. Its sales jumped 21 per cent for the year and 10 percent in December. Demand was led by the Jeep Grand Cherokee SUV, Ram pickup and Chrysler 300 luxury car.

Some of those same vehicles pushed Chrysler Canada to its strongest year since 2000. Chrysler sold 243,845 vehicles here last year, up six per cent from 2011. 

'Give us 18 months and you're going to see the whole portfolio turned' —GM's North American President Mark Reuss

Ford Motor Co. of Canada held its place as the country’s top-selling automaker, though its full-year sales of 276,068 vehicles mark less than a 1 per cent increase over 2011.

"We are optimistic as the Canadian industry continues to grow," said Dianne Craig, president and CEO at Ford of Canada.

"Ford has invested heavily in fuel-efficient gas engines, hybrids, plug-in hybrids and electric vehicle technology, so our customers are given the power of choice."

In the U.S. full-year sales at Ford and General Motors lagged. GM's rose only 3.7 per cent for the year, while Ford edged up 5 per cent.

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 per cent 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.

Toyota, which has recovered from an earthquake and tsunami in Japan that crimped its factories two years ago, said Thursday that sales jumped 27 per cent for 2012. December sales were up 9 per cent. Unlike 2011, the company had plenty of new cars on dealer lots for most of last year.

Honda sales rose 24 per cent for the year. Nissan and Infiniti sales were up nearly 10 per cent 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 per cent.

Fiscal cliff

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 per cent 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.

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 per cent 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 per cent from last year. New models usually boost sales.  

But the firm's optimistic forecasts hinge on Washington reaching an agreement on government debt limits and spending cuts.