US auto sales fail to gain momentum

Detroit: US auto sales struggled to gain ground in November and big improvements aren't expected until people stop worrying about losing their jobs.

Sales were flat compared to last November, according to Autodata Corp. Even higher incentives couldn't push the needle much beyond the dismal lows seen a year ago, when a credit freeze and the financial meltdown kept car buyers at home.

Fuel-efficient cars had continued strength, as did crossovers, which are as roomy as SUVs but are built on lower car frames, bolstering fuel economy. Truck sales were again weak.

Last month's big winner was South Korea's Hyundai, which posted double-digit sales growth. Sales at the top three sellers in the US — General Motors, Ford and Toyota — held steady, while Chrysler struggled for yet another month.

Sales were down 11 per cent from October. But Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates, said the industry is encouraged by the seas-onally adjusted sales rate, which takes into account perennial factors like higher sales in the spring and summer. That rate has been climbing each month since Cash for Clunkers ended in August, he said.

The adjusted rate was 10.9 million in November compared with 10.5 million in October. "If that trend continues to hold, that fits with our expectations of a long and slow recovery," Schuster said.

Small monthly auto sales increases are likely as the economy continues its slow improvement, but larger gains will not happen until the unemployment rate drops substantially and people feel confident spending money on big-ticket items, said Martin Zimmerman, a former chief economist at Ford.

The US jobless rate hit 10.2 per cent in October, a 26-year high.

Spending

"At this point, jobs and confidence are intertwined, and that seems to be holding consumer spending in check," said Emily Kolinski Morris, a current senior economist at Ford.

Carmakers continued to rely on discounts and other incentive spending to sell cars and trucks last month. Sales incentives rose 2 per cent to $2,713 (Dh9,957) a vehicle, according to the auto website Edmunds.com.

But those offers lacked the desperation of last Nov-ember, when car makers boosted incentives by 15 per cent, indicating automakers now feel more confident.

General Motors said sales fell two per cent in November, though sales of its core Buick, Cadillac, Chevrolet and GMC brands rose. GM executives said despite the sales decline, the company is on better footing than it was late in 2008, with fewer brands and models.

Ford's sales were essentially flat compared to last November, at 122,846, although sales of crossovers rose 26 per cent.