Auto Sales Near 5-Year High as Car Loans Seen More Profitable

It is a good time to be selling new cars. U.S. Sales in November are racing toward an annual rate of more than 15 million vehicles, which approaches a five-year high.
Meanwhile, consumers are more likely to default on credit-card debt and sometimes even a mortgage before car loans. Auto-loan delinquencies are near record lows.
That makes car lending the more profitable type of loan.
General Motors said Wednesday that it will buy Ally Financial’s operations in Europe, China and Latin America as it builds global finance unit to make low-interest car loans.
GM’s U.S. loan business, GM Financial, will pay $4.25 billion for the Ally assets, which will help the top U.S. carmaker better compete where other automakers already have their own loan divisions. Automakers with their own finance arms subsidize loans and leases to boost sales.
For November, Ford, Honda and Nissan reported better-than-expected U.S. sales. Chrysler Group LLC, Toyota and Hyundai also saw strong increases, while industry executives forecast strong sales through the end of this year and into early 2013.
However, sales for General Motors Co came fell short of expectations. The nation’s top automaker said it benefited less than its rivals from the November recovery after Hurricane Sandy hit the Northeast since a smaller share of GM’s sales come from that region. GM also offered less incentives.
“It’s clear that the industry will come in at the high end of our full-year sales forecast,” said Kurt McNeil, GM vice president of U.S. sales operations. “Exactly how much growth we can expect next year will depend in part on how Congress and the president resolve the fiscal cliff issue. Consumers hate uncertainty, so an agreement on ways to reduce long-term federal budget deficits could remove an impediment to growth.”

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