November U.S. Light-Vehicle Inventory Surges From Prior Month
Assuming increased incentive spending at the end of the month, stock levels heading into December easily can support another 16-million-plus SAAR.
![Packed inventory of Traverse bodes well for strong December for CUVs Packed inventory of Traverse bodes well for strong December for CUVs](https://eu-images.contentstack.com/v3/assets/blt7121b6ec5c11097b/blt68e726f83db210e8/66199c1fceb762ad07b2078e/2013-chevrolet-traverse.jpg?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
U.S. light-vehicle inventory spiked upward more than usual from the prior month in November despite higher than expected sales that included an extra selling day taken from December.
Inventory increased by a whopping 241,000 units from October to November to a total of 3.64 million units. October-to-November increases typically are about 150,000 units in a healthy market, but this year’s rise was an 11-year high.
Coming off the best sales volume for November in 10 years, the magnitude of the increase was somewhat surprising, though the market currently is in a growth mode and it makes sense to build up inventory to meet rising demand.
Another cause for the spike could be that some automakers reported inventory on Nov. 30. But November’s sales included deliveries through Dec. 2. Because the last selling day of any month usually is one of the bigger volume days, if not the biggest, the industry total heading into the official December sales period could be skewed upward.
November’s total was 7.1% above October and 13.8% above year-ago. Days’ supply remained flat with October at 76, but above November 2012’s 70.
Inventory was tracking 2013 at pre-recessionary 5- and 6-year highs until jumping to 9-year peaks in October and November.
With the specter of excess stocks looming, October’s robust inventory served November well, as sales hit a post-recession-high seasonally adjusted annual rate of 16.3 million. Assuming increased incentive activity around the holidays, stock levels heading into December support another 16-million-plus SAAR. Otherwise, there might be some payback for November’s robust results with the SAAR dropping to between 15.5 million and 15.9 million units.
About one-third of the October-to-November increase was with CUVs, the largest and fastest growing segment group. Year-to-date CUV sales were up 16.3% from like-2012 and market penetration, at 25.3%, will be the best-ever for the segment after December’s tally. December should be a particularly big month for midsize and large CUVs.
November’s CUV inventory was 21.9% above year-ago, and 10.2% above the prior month. Days’ supply was 65, compared with year-ago’s 60.
Another segment poised for a huge month is large pickups. December has been the best sales month for the segment for three straight years, and likely will be again in 2013. Stocks of Ram pickups are up 24.1% from year-ago, and Ford F-Series is 14.0% higher. Segment leader General Motors is slightly below year-ago, and both Nissan and Toyota have reduced stocks.
The scheduled rollback of a tax deduction on depreciation at the end of the year that affects commercial vehicles could enhance sales of heavy-duty pickups to fleets seeking to take advantage of the current rate. Based on their inventories, Ram pickups above 6,000 lbs. gross vehicle weight and the Ford F-SuperDuty could benefit the most.
While inventory increases may be justified for CUVs and pickups, the combined volume increase for small and midsize cars equaled 40% of the industry’s total gain from October. In fact, Nov. 30 days’ supply for small cars was 80, compared with 68 a year ago, and midsize cars climbed to 82 from 67 in like-2012.
December sales tend to favor trucks over most car segments. The best months for small and midsize cars are in the first half of the calendar year.
Part of the small/midsize-car inventory buildup could be in preparation for a rebound in fleet deliveries, which, especially for rental cars, has slowed thus far in the fourth quarter. However, the robust stocks could lead to some heated pricing competition in the car segments by the end of the month.
Automakers with high stocks of small and midsize cars include Chrysler, Ford, General Motors, Honda and Volkswagen. In Chrysler’s case, the buildup could be a preemptive move to temporarily fill the coming scarcity on dealer lots when production of the Dodge Avenger ends in early 2014.
Inventory of domestically made LVs ended November at 2.94 million units, 12.0% above year-ago, and equal to an 81 days’ supply, vs. like-2012’s 74. Import stocks climbed 21.8% from year-ago to 698,745, and posted a 62 days’ supply compared with like-2012’s 55. Imports stocks accounted for 19.2% of the total vs. 17.9% a year ago.
Higher import volume was rooted in luxury cars from Audi, BMW and Porsche, as well as stronger levels for the Hyundai Genesis and all-new Kia Cadenza.
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