Will the Boost in Auto Sales Last?

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The Commerce Department released new figures that showed the U.S. economy grew less than previously estimated.  Gross domestic product climbed at a 1.8 percent annual rate in the third quarter, down from the 2 percent estimated last month.  Household purchases increased at a 1.7 percent rate, according to the report, down from an earlier estimate of 2.3 percent.

However, figures show households have become more willing to purchase big-ticket items.  A popular item to analyze the health of the consumer market is vehicle sales.  Sales of cars and light trucks advanced at a 13.6 million seasonally adjusted annualized rate in November, the best since August 2009, according to researcher Autodata Corp. Spending during the Thanksgiving weekend jumped 9.1 percent per customer from a year earlier to an average of $398.62, according to the National Retail Federation. Sales totaled a record $52.4 billion.

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Shares of big automakers such as Ford Motor Co. (NYSE:F) and General Motors Company (NYSE:GM) jumped more than 2 percent on the positive data.  Meanwhile, shares of Toyota Motor Corp. (NYSE:TM) and Honda Motor Co. (NYSE:HMC) gained less than 1 percent.  While the new data is bullish for the auto market in the short-term, some are concerned about sales next year.

“When you consider that sales performance late this year was boosted by a tailwind of buyers who deferred their purchases this summer, it suggests we may have some sales speed bumps to deal with next year,” said Edmunds.com Vice Chairman Jeremy Anwyl.  Edmunds.com provides a wide range of information about the auto industry through its website.  The company expects 1.23 million new cars will be sold in December, or a projected seasonally adjusted annual rate of 13.4 million units.  This represents a slight dip from November.  Edmunds also expects General Motors Co. to receive the largest month-over-month increase in sales and market share.

It has been a rough year for many automobile stocks.  Shares of General Motors Co. and Ford Motor Co. have plummeted 43 percent and 34 percent year-to-date, respectively.  Toyota Motor and Honda Motor have faired better, but both are also in the red for the year.  However, backdoor auto plays such as Goodyear Tire & Rubber Co. (NYSE:GT) and Autozone Inc. (NYSE:AZO) have both surged about 20 percent year-to-date.  Shares of Genuine Parts Co. (NYSE:GPC), which engages in the distribution of automotive replacement parts, have gained 17 percent year-to-date.

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