U.S. Auto Sales Speed Up

US auto sales rose more than expected in November, putting the industry within reach of a second straight year of record sales. According to Autodata, sales rose at a seasonally adjusted annual rate of 17.87 million, while economists had estimated that sales rose at a 17.7 million rate.

Sales this year have been supported by automakers’ use of incentives and continued low interest rates. The timing of Black Friday in November also helped dealers close more transactions, since it happened a few days earlier than last year. The big winners in the growth game were Volkswagen of America, with a 24% increase, Porsche, with a 23% increase, and Kia and Subaru tied for third with a 15% rise. At the bottom of the growth chart was Fiat Chrysler, who lost 14%, Toyota gaining a meager 4%, and Honda, with a less-than-expected 7% growth rate.

Volkswagen offered the best incentives this year after a massive recall, and public relations debacle related to it’s manipulation of it’s diesel emissions technology, and cheating on the Environmental Protection Agency emissions tests. The German-based company agreed to pay a record $14.7 billion to settle those claims, and offered payouts to affected car owners of varied amounts to try and “make good” on their actions.

“Beyond the day of deep discounts, this greater use of incentives and price discounts to attract buyers is not sustainable”, said Michael Gapen, a Barclays analyst, in a note. They have eroded the quality of sales and could hurt carmakers’ earnings. In the coming months, more attention may be paid to the impact of rising interest rates on auto lending and demand. There’s not likely to be a dramatic effect, however — at least not immediately.

“We see reasons to believe that auto financing will become more restrictive over time,” Gapen said last month. “Commercial banks are now tightening standards on auto loans, and readings on household debt service ratios suggest that delinquency rates have likely bottomed.”

The recent election may have an indirect effect on what consumers purchase in December, and in 2017, as potential buyers wait to see the economic impact of an erratic stock market. If everyone plays by the rules, auto sales will continue to rise.