January 4, 2012 in Business, Nation/World

Americans bought more cars and trucks in 2011

Associated Press
 
Group reports Christmas week sales surge
NEW YORK — A flurry of post-Christmas bargain shopping helped drive sales higher in the last week of December, according to a report today from a shopping mall trade group. Increased gift card use, mild weather and a federal holiday on Monday all contributed.

Sales at stores open at least one year rose 5.3 percent during the week ended Saturday compared with the same period a year ago. That report comes from the International Council of Shopping Centers and Goldman Sachs Weekly Chain Store Sales Index, which estimates sales for 24 major stores like Target Corp. and Costco Wholesale Corp.

Revenue at stores open at least a year rose 1.2 percent for the week ended Saturday compared with the previous week, according to the index.

The metric is considered a key gauge of a retailer’s health because it excludes results from stores recently opened or closed.

As a result of the latest surge, the group increased its December sales growth estimate to a range of 4 percent to 4.5 percent. Previously the council expected December sales to rise by 3.5 percent to 4 percent.

Major retailers are set to release their final figures for the month on Thursday, but the big concern is how aggressive discounting and other incentives like earlier store openings and free shipping affected merchants’ profits. Stores are expected to offer comments regarding their outlook for fourth-quarter results, which will be released next month.

For the official start of the holiday shopping season, stores opened as early as Thanksgiving Day, plying shoppers with discounts, resulting in record sales. But shoppers took a longer-than-usual break after that, and some stores had to step up discounting beyond what was planned in the final days before Christmas to attract shoppers, according to David Bassuk, managing director of retail at the consulting firm AlixPartners. Post-Christmas bargains were even better. Express stores, for example, promoted an “End of Season” sale, with merchandise prices reduced by up to 70 percent.

“The concern going into the season was that the profitability wouldn’t be as high as a year ago,” said Mike Niemira, chief economist at the International Council of Shopping Centers. “I suspect adjustments will have to be made.” That could range from closing stores in unprofitable locations to changing marketing strategy.

For the November and December period combined, revenue at stores open at least a year is now expected to rise by 3.8 percent, up from the original 3.5 percent, says Niemira.

The ICSC expects total retail sales for the combined November and December period to rise 3.8 percent, up from an earlier forecast for 3.0 percent growth. Total retail sales exclude data from gas, automotive dealers, gas stations and restaurants and conform to data in the government retail sales report. The Commerce Department releases December sales data on Jan. 12.

DETROIT — Americans bought more cars and trucks last year, inspired by easier credit, an improved economy and the desire to replace aging vehicles that got them through the Great Recession.

Sales rose sharply for Detroit’s three carmakers and for Japan’s Nissan in 2011, aided by a surge in November and December. Analysts expect that momentum to continue into 2012.

Low interest rates, looser credit standards and pent-up demand are driving demand. The average age of a car on U.S. roads is the oldest ever, closing in on 11 years. Americans want to trade in those older vehicles now that a tentative recovery has begun and they’re feeling a little more secure about jobs and finances.

Buyers also were drawn out by an array of high-quality small cars with nice, roomy interiors and more features than in the past. That made it easier to downsize from bigger cars amid high gas prices. Pickups also sold well as business began to replace the trucks they need to haul equipment.

Car companies want sales to keep growing following a nearly 30-year low in 2009. The economy benefits from healthy car demand because it promotes spending on big-ticket items and creates jobs.

After final figures are tallied late Wednesday, U.S. auto sales should rise to around 12.7 million in 2011. That’s a 10 percent jump from 2010 and 22 percent from 2009, when the U.S. auto industry and the financial system were in peril. Sales are almost certain to rise again in 2012, perhaps as high as 13.8 million, which would mark the third straight year of growth.

“Over the course of the fourth quarter of 2011, clear signs emerged that U.S. consumers are more confident and that other underpinnings of our economy are either stable or slowly improving,” said Don Johnson, GM’s U.S. sales chief.

Chrysler led the 2011 sales gains with a 26 percent increase, followed by Nissan at 15 percent, GM at 13 percent and Ford at 11 percent, the companies reported Wednesday.

For December, Chrysler sales surged 37 percent from a year earlier on strong demand for the Jeep Wrangler and the Chrysler 200 sedan. GM was up 5 percent for the month, aided by the Chevrolet Cruze compact and pickup sales. Ford sales rose 10 percent, led by the new Explorer SUV. Nissan sales rose nearly 8 percent for December.

Chrysler Group LLC’s strong showing for December capped a remarkable turnaround under its new Italian ownership. And it’s expected to jump ahead of Honda as the No. 4 U.S. automaker in 2011.

Chrysler and GM nearly ran out of cash in 2009 and needed government help and a trip through bankruptcy protection to survive.

Chrysler, now majority owned by Fiat SpA, sold 1.37 million vehicles last year, about 284,000 more than in 2010. It has introduced 16 new or revamped models in the past two years, vehicles that have fueled its recovery.

Sergio Marchionne, CEO of Chrysler and Fiat SpA, is predicting a net profit for 2011 of $600 million.

“Over the past 12 months, we successfully changed the conversation from Chrysler’s survival to products and service that consumers expect and want from a great American automaker,” Marchionne said in an e-mail to employees.

Nissan sold just over one million cars and trucks last year, its best calendar year ever. The company said it sold 944,000 Nissans and more than 98,000 of its Infiniti luxury cars and SUVs. Previously, 2007 had been the company’s best year.

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