Ford and GM rally on strong car sales for November

Strong car sales data for November boosted shares of Ford and General Motors on Thursday, as many of the industry’s prominent players benefited from Black Friday, aggressive promotional activity and a few extra selling days.

Ford shares rose 3.9 per cent to $12.43, after it said that light-vehicle sales had grown by 5.1 per cent on a year-on-year basis, beating analysts’ expectations of a modest 0.5 per cent gain.

While car sales dipped 9.7 per cent, that decline was offset by strong growth in sales of Ford-brand SUV sales, which rose 20 per cent, and a 4.9 per cent increase in truck sales.

General Motors’ stock gained 5.5 per cent after reporting that total US sales had improved 10 per cent, sending its shares to $36.43, their highest point since March 2015. Its Buick and Cadillac brands were top performers in the past month, posting gains of 22 and 17 per cent, respectively.

Mustafa Mohatarem, the company’s chief economist, said that economic indicators pointed to “significantly improved optimism about the US economy including consumer and business sentiment, which continue to drive a very healthy US auto industry”.

That view has been echoed by industry analysts, who see car sales on track to finish the year at or near last year’s 17.5m before possibly losing some of that momentum next year or in 2018. November in particular benefited from strong Black Friday sales, as well as two extra selling days.

However, the industry, like many others, is facing some uncertainty in the coming years under US president-elect Donald Trump.

While Mr Trump has pledged to strengthen US manufacturing and stimulate the economy via fiscal measures, he could also put pressure on carmakers’ costs if he interferes with decisions such as whether to send some production to cheaper overseas countries such as Mexico.

Karl Brauer, executive market analyst for Auto Trader and Kelley Blue Book, said that record car sales in 2016 “remains within reach, despite a plateauing sales rate over the past several months”.

Kelley Blue Book said in a conference call on Thursday that it predicted that 2017 sales would fall to between 16.8m and 17.3m, from 17.5m in 2015 and a similar figure for 2016. It pointed out that more cars entering the used-car pool was putting downward pressure on used-car values, which made them more attractive and could also hit new-car demand.

Other carmakers, including Nissan and Toyota Motor Corporation, also announced strong US sales in November. Nissan said that sales were up 7.5 per cent, boosted by a 24 per cent rise in sales of crossovers, trucks and SUVs to set a new record for the month. Toyota said that November sales volume was 4.3 per cent higher than in the same month last year.

Fiat Chrysler, meanwhile, bucked the November trend to post a 14 per cent decline in sales last month compared with a year earlier, due in part to a broad drop-off in sales for its Jeep, Fiat, Dodge and Chrysler brands. Nevertheless, the company’s shares rose 1 per cent amid the generally optimistic industry trend lines.

At the close in New York, the S&P 500 had ceded 0.4 per cent to 2,191.1, the Dow Jones Industrial Average was 0.4 per cent higher at 19,191.9, closing at a record high. The Nasdaq Composite lost 1.4 per cent to 5,251.1 as the S&P 500 technology sector slid 2.3 per cent.