US auto sales speed up after 2 year slowdown

Higher incentives and better model selection in November led to the best month for US auto sales in more than two years. The annualised sales rate for November is expected to be 13.4 million, according to economists polled by Reuters. This will be the best showing since August 2009, when the US government launched its "cash for clunkers" auto rebate programme. If projections hold, November will be the third straight month the annualised sales rate will top 13 million. November sales were also buoyed by brisk pickup truck sales spurred by lower fuel prices and greater demand from business owners, analysts said. Article continues below The improved performance comes as the industry recovers from the March earthquake in Japan, which triggered vehicle shortages that hollowed out dealer inventories and depressed sales during the summer. No constraints "Our dealer checks this month suggest that inventories are no longer a constraining factor on auto sales, as the ‘v-shaped' recovery following the Japanese earthquakes and tsunami essentially has run its course," Jefferies analyst Peter Nesvold said in a research note. But Nesvold warned the recent flooding in Thailand could hurt Japanese automakers' production, which would hurt inventory levels in a more muted manner in months to come. Other analysts cautioned that the recent performance of US auto sales, which comes amid mounting concerns about the health of the US economy, may be a function of so-called "deferred demand." "While sales are strong now, we are still witnessing the deferred demand from the summer months, so we cannot expect this sales level to be considered the new normal," Edmunds.com analyst Jessica Caldwell said. Deferred demand for Honda and Toyota vehicles may have boosted sales for the month by 200,000, Barclays Capital analyst Brian Johnson estimated. Without this boost, the US sales rate would hover around 13.1 million, he added. Honda and Toyota could capture a combined 23.5 per cent of the US market in November, up from 20 per cent in October. Analysts expect Toyota's US market share to be 13.5 per cent, the highest since April, before the earthquake effected supply.