GM sales rise as auto recovery continues

Sales of General Motors cars and trucks rose 11 per cent last month as the auto industry's slow-motion recovery continued to gain traction.

Industry analysts say the numbers, combined with a strong October, show that consumers who have kept their jobs through the economic downturn are now feeling confident enough to spend money and replace older vehicles.

GM, the first automaker to report US sales figures Wednesday, said it sold just under 169,000 vehicles in November compared with 151,000 in the same month last year. Much of the growth was driven by crossover vehicles such as the Chevrolet Equinox and Cadillac SRX, which are like sport utility vehicles but are more efficient because they are built on car underpinnings.

Equinox sales were up more than 60 per cent, while SRX sales rose nearly 36 per cent. GM also saw more modest increases in passenger car and pickup truck sales. The Chevrolet Silverado pickup, traditionally GM's top-seller, saw an increase of 16 per cent.

Sales of GM's four brands - Chevrolet, Buick, GMC and Cadillac - rose 21 per cent compared with the same brands last November. GM got rid of Pontiac, Saturn, Hummer and Saab as part of its bankruptcy restructuring.

GM reported increased showroom traffic toward the end of the month, after its initial public stock offering on November 18.

The US government, which spent US$49.5 billion bailing GM out of its financial troubles last year, cut its stake in the company from 61 per cent to about 33 per cent by selling stock in the IPO.

GM has maintained that government ownership has hurt its image with consumers and its sales.

Industry analysts J.D. Power and Associates are predicting that November US sales overall will rise about 15 per cent, while consumer website Edmunds.com predicted sales will increase 17 per cent compared with November 2009.

The increased sales likely are due to a combination of rising confidence and pent-up demand as people replace vehicles they have kept for longer than normal during a severe auto industry downturn, said Bruce Clark, senior vice-president of Moody's Investors Service.

"There is a degree of pent-up demand that's being met gradually by people who have kept jobs and can go out and afford to do such things," Clark said. The sales are not as robust as historic highs from the early 2000s, but they are still a good sign for the industry and the economy, Clark said.

"It makes sense to me that we should have some modest growth of the type that we're talking about right now," he said.

Predictions

Moody's is predicting US sales this year of 11.5 million cars and trucks, rising to around 13 million next year, still far short of the 2000 peak of 17 million. Sales so far this year are running at an annual rate that matches the Moody's prediction.

That's less than the 12.5 million vehicles that are typically scrapped each year. Eventually, that means auto sales will have to increase as people replace their older cars, Clark said.

"I see an upward trajectory with less volatility than we've had over the last several months," Clark said.

Americans' confidence in the economy rose to a five-month high in November, showing increased optimism for the first half of next year.

The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence Index rose to 54.1 in November, up from a revised 49.9 in October. Consumer spending also was up. The confidence report came in the shadow of high unemployment and declining home values.

AP