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    Saturday, May 11, 2024

    U.S. auto sales head toward records as carmakers pour on deals

    Automakers, already poised to break U.S. sales records for both November and the year in a strengthening economy, are leaving nothing to chance: They're boosting rebates and other deals in an effort to swipe market share from rivals.

    Aided by offers ranging from zero-percent financing and rebates to Ford's Friends & Neighbors discounts, the carmakers spent 6 percent more this month on incentives than they did a year ago, according to TrueCar Inc., a vehicle pricing research firm. The annualized sales pace for November may reach 18.2 million cars and light trucks, according to the average of 12 analysts' estimates compiled by Bloomberg.

    Why the spendthrift marketing? Automakers, like retailers, have started kicking off their year-end holiday sales in November. Traditionally, December has been the time to buy a new vehicle. Now, with carmakers trying to steal buyers from each other, they have started their offers a month early.

    "It used be that the time to buy was between Christmas and New Year's: Everything was on sale; people were off," said Jeremy Anwyl, an independent auto-industry consultant in Las Vegas. "It wouldn't be a bad thing if we pulled our foot off the gas and let sales slow down a little bit because it's getting expensive to keep them where they're at."

    When automakers report monthly sales Tuesday, the industry may show a decline in total vehicle sales of 1.6 percent, according to an average of five analyst estimates. That is mostly because there were two fewer selling days than a year ago. The forecast includes gains of 2.9 percent for General Motors and 3.2 percent for both Ford and Fiat Chrysler Automobiles.

    Consumers were buying cars at a fast rate even before the deals started coming, but the November rebate spree has clearly helped. The lowest estimate for the annualized sales rate, from research firm LMC Automotive, is for 17.7 million vehicles, which would still be a record for the month. With a strong second half, full-year auto sales are on pace to either match or beat the record of 17.4 million vehicles set in 2000, said Eric Lyman, TrueCar's vice president of industry insights.

    Automakers are getting help from the U.S. economy. Employers may have added 200,000 jobs in November after a payroll gain of 271,000 in October that was the biggest this year, according to the average estimate in a Bloomberg survey of economists. The Commerce Department last week said the economy grew at a faster pace in the third quarter than previously reported. Investors have raised to about 72 percent the probability of an interest rate increase by Federal Reserve policymakers in December, the federal funds futures market shows.

    One reason automakers are being so aggressive anyway is that industry forecasts now indicate sales may start to peak next year or in 2017. The manufacturers want to grab as much market share as possible now, Lyman said.

    "We could be seeing the last big push by carmakers before the market softens," Lyman said. "It's a case of automakers making hay while the sun shines."

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