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Late Auto Sales Spurt Points to a Big 2011

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January 13, 2011 by   Leave a Comment

After an agonizingly slow start, 2010 finished with a fourth-quarter rush that persuaded some automakers to raise their 2011 sales forecasts, Automotive News reported this week.

The December sales rate was the best of the year, pushing the 2010 U.S. light-vehicle total to 11.6 million units, up 11% from a 27-year low in 2009.

Last month’s seasonally adjusted sales rate was 12.6 million units — the third straight monthly rate above 12 million.

The fourth-quarter flourish capped a turning-point kind of year. Sales came off the floor; the Japanese lost market share for the first time since 1996; and the traditional Detroit 3 brands added share for the first time since 1993.

But all automakers like what they see ahead. Last week, both Ford Motor Co. and General Motors Co. raised the upper range of their 2011 light-vehicle sales forecasts by a half million units, to 13.3 million.

Ford sales boss Ken Czubay said he expects both retail and fleet sales to grow in 2011 because of the redesigned Focus and Explorer.

“We are starting to see the first fruits of our efforts to build products that appeal to a wide range of customers,” he said. “This signals potential growth as we go into 2011.”

Don Johnson, GM’s vice president of U.S. sales, said the depressed housing market and lingering unemployment will hamper auto sales growth in 2011. But he predicted those factors will ease later in the year.

“GM is encouraged by recent improvements in consumer spending and confidence,” Johnson said. “We expect the extension of tax cuts and unemployment benefits will help propel consumer spending.”

IHS Automotive forecasts that North American light-vehicle production will increase 15% to 3.3 million units in the first quarter.

The year’s broad trends:

  • Japanese brands lost a combined 1.7 points of U.S. market share. Most of it went to the Detroit 3 and Hyundai-Kia.
  • Vehicles built in North America accounted for 76.4 percent of U.S. sales, up from 73.9 percent in 2009. Detroit’s rebound contributed, but Asians also shifted manufacturing to North America to cope with a weak dollar and rising costs at home.
  • Luxury brands generally outperformed the industry average, led by gains of more than 20 percent at Cadillac, Infiniti, Acura and Audi.

Among the winners and losers:

  • Four major groups — Ford, Nissan, Hyundai-Kia and Chrysler — scored double-digit sales increases and boosted their market share by a combined 2.4 points.
  • Subaru and Audi had record sales, with Subaru topping a quarter-million units and Audi surpassing 100,000.
  • Each of GM’s four surviving brands posted a double-digit gain: Chevrolet, 17%; GMC, 32%; Cadillac, 35%; and Buick, 52%. Overall, that’s a 22% increase for those four brands over 2009.
  • Hyundai-Kia, up 22%, solidified its position with almost 900,000 sales.
  • At Ford Motor, the strength was all from the Ford brand: A 22% jump pushed it past Toyota as the No. 1 U.S. brand. Lincoln lost market share, and Mercury’s 1% rise was driven by closeout sales.
  • Toyota Motor Sales lost 0.4% in sales and 1.8 points of market share.
  • Suzuki sales plummeted 38%, Smart fell 59%, and subbrand Scion slipped 21%to deepen Toyota’s losses.
  • General Motors — including its discontinued brands — and American Honda each boosted sales 7%. Still, they lost market share by underperforming the industry.

Although 2010′s growth of 1.2 million units from 2009 began the industry’s climb from a two-year sales crash, automakers are acutely aware of how far they have to go.

Some perspective: Excluding 2009, last year’s sales were the lowest since 1982. And 2010′s volume was only two-thirds the 17.4 million sales in the peak year of 2000. The three best-selling automakers in the U.S. market are among the worst of the wounded.

Except for 2009, GM’s 2.2 million U.S. volume was its lowest since 1952 and less than a third of its 1978 peak year of 6.9 million. Ford’s 2009 and 2010 sales were its lowest since 1961. Last year was Toyota’s third straight decline and its worst U.S. total since 2002.

“We’re coming off the most challenging time in our 53-year history,” said Don Esmond, Toyota vice president of U.S. operations. “We’ve never headed into a new year with as much excitement and anticipation as we are in 2011.”

Declaring Toyota “in full recovery mode,” Esmond said it will introduce 10 new or refreshed models in 2011 and will try to boost fleet sales, which fell to 8.5% of the mix last year, from a typical 10%.

Ellen Hughes-Cromwick, Ford’s chief economist, said last week that recent economic indicators “are supporting ongoing improvements in consumer spending.”

Noting that auto sales usually improve several months before the U.S. economy does, she said the economy should improve in 2011.

Said Hughes-Cromwick: “The strength in auto sales last month is also a good leading indicator of the economy.”

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