) -- Car sales in November were more encouraging than analysts had estimated.
In one of the first months free from the so-called cash-for-clunkers tax credit for buyers, demand held up surprisingly well, indicating that dealer incentives and attractive financing may be enough for the industry to combat fears about the sluggish economy and job losses.
Concern that the government's tax incentives shifted, rather than created, demand appear to be unfounded. Sales topped 10.9 million on a seasonally adjusted, annualized basis versus an estimate of 10.5 million. American car companies such as
had disappointing months, for sure, with Ford's sales little changed and GM's declining 2%. The biggest loser appears to be
, yet again, whose sales plummeted 25%. Still, Ford looks to be on the right path as weakness in the SUV and truck segments won't matter as much as the company moves toward making smaller, fuel-efficient cars.
posted mixed results, with Honda's sales falling 2.9% from a year earlier and Toyota's rising 2.6%. The big winner was
and its sister company,
, which have been on a tear, increasing sales by 46% and 18%, respectively.
Strength among foreign carmakers because of Detroit's decline is troubling, on the surface, as many assume it will mean further job losses. While American plants are closing, it doesn't necessarily mean a total loss of auto-industry employment.
Hyundai maintains a research-and-design facility and proving ground in California, an engineering building in Michigan and a production plant in Alabama. Kia has constructed a production facility in West Point, Georgia, that was scheduled to open last month. Even though the names are foreign, most of the labor that goes into the vehicles is American. Toyota and Honda have maintained U.S. production facilities for years.
The signals coming from the car industry don't suggest high confidence. But for November sales to beat estimates and improve upon the previous month at a time when unemployment hit 10.2% is a noble feat.
-- Reported by David MacDougall in Boston.
Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level III CFA candidate.