Will December Car Sales Foreshadow the 2013 Auto Market?

ford focusThe U.S. auto industry has had a good 2012. In fact, despite strong economic headwinds, it’s been the best year since 2007. Overall 2012 sales are expected to come in at 14.5 million units, a 13 percent gain over 2011, and expectations for December are looking even better.

Analysts polled by Thomson Reuters forecast an annual sales pace of about 15.2 million vehicles for December. Truecar.com is forecasting month-over-month sales growth of over 20 percent for each of America’s top three manufacturers, General Motors (NYSE:GM), Ford (NYSE:F), and Chrysler.Combined with strong sales growth from other major manufacturers, this translates into a seasonally adjusted annualized rate of 15.6 million for the month, a 14.7 percent increase year over year. U.S. sales for Toyota (NYSE:TM), which accounts for about 14 percent of the market, are expected to grow 16.5 percent month over month.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

Kristen Andersson, an analyst for TrueCar.com, comments that “automakers were able to curb their incentive spending while still improving sales. The average incentive spending per unit for 2012 was at its lowest levels since 2002 when auto sales were at 16.8 million.”

But it’s not all good news for the auto industry. Moody’s expects that low demand in Europe will continue to hurt global auto industry growth in 2013…

european commissionCar sales in the European Union are at 19-year lows, falling 7.6 percent for the first eleven months of 2012. Sales have suffered in the face of high regional unemployment, high debt, and the resulting austerity measures.

The Organisation for Economic Co-operation and Development is predicting that euro-area GDP will contract 0.1 percent in 2013, before recovering just 1.3 percent in 2014. This crawling economic recovery will foreshadow the progress of the auto industry. GM and Ford, which have each logged over a billion dollars in losses from the European market, don’t expect a recovery until mid-2014.

Moody’s expects Western European light vehicle demand to contract by 3 percent in 2013, downwardly revised from earlier projections of 3 percent growth. This compares to global light vehicle sales growth of 2.9 percent, which was downwardly revised from a 4.5 percent estimate early in the year. Full-year 2012 light vehicle sales growth is expected to be 4.4 percent.

Light vehicle demand growth in China was revised from 10 percent to 8.5 percent for 2013, in line with renewed GDP estimates.

At home, there are concerns that the a weak resolution to the fiscal cliff will negatively impact the domestic car market. If policymakers can’t find a way to renew the Bush-era tax cuts, U.S. households will see their taxes go up on average over $3,000, more than enough to curb spending behavior.

Don’t Miss: Fiscal Cliff Whacks Consumer Confidence and Stocks.