U.S. auto sales in April are expected to rise 7% and the annual sales pace should top 15 million vehicles for the sixth straight month as consumers remain positive about the economy, J.D. Power and Associates and LMC Automotive said today (April 19).
Reuters reported that sales of new cars and trucks in April are expected to climb to more than 1.3 million vehicles, while the annual sales pace is forecast to reach 15.2 million vehicles, the research firms said in their monthly forecast. Since November, the annual rate has ranged from 15.3 million to 15.5 million.
Auto sales are an early indicator each month of economic health. The industry has so far proven stronger than the overall U.S. economy as the record high age of cars and trucks on the road has reached more than 11 years, and easier availability of credit have pushed consumers into the market.
“The irrepressible buying behavior of consumers is driving auto sales growth in 2013, as consumer spending remains remarkably stronger than the economy suggests it should be,” Jeff Schuster, senior vice president of forecasting at LMC, said in a statement.
“If the current favorable trend in the stock markets and housing continues throughout the year, the automotive market may be poised for a breakthrough performance,” he added.
The forecast said strong sales are being complemented by the ability of automakers to increase their prices to boost profit margins.
Consumer-facing transaction prices are up 3.1%, which equates to an extra $13.2 billion spent on new vehicles through the first four months of the year, J.D. Power said. The average price of used vehicles sold at dealers has also risen 3.8% so far this year.
“The strong used-vehicle prices we’re seeing are supporting new-vehicle demand and are reflective of the general pricing discipline being exhibited by new-vehicle manufacturers,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power.
“Industry sales are also benefiting from an increase in the number of maturing vehicle leases, a trend that will continue throughout 2013,” he added.
The U.S. auto sector is scheduled to report April sales results on May 1. In March, sales rose 3.4% — in line with expectations — as rising home prices and an increase in housing construction spurred demand.
Detroit’s carmakers saw strong June U.S. car sales with Chrysler Group LLC, a subsidiary of Italian Fiat SpA (Milan: F), reporting 20% year-over-year sales growth, General Motors Co. reporting 16% sales growth and Ford Motor Co. reporting more modest 7% sales gains.
The news sent automakers’ shares up, with GM’s up about 6%, with more modest gains for its rivals, the International Business Times reported.
Chrysler was the first major automaker to report June car sales Tuesday and posted its strongest June in five years with 144,811 vehicles sold. However, industry analysts expect overall U.S. auto sales to be more or less flat from May with a seasonally adjusted average selling rate, or SAAR, of between 13.6 million and 14 million for June. June sales for U.S. automakers were strong in June, though, in part due to insulation from macroeconomic uncertainty for the industry.
“The combination of new products, available credit, lower fuel prices and modest economic growth was a stronger influence on consumer behavior than economic and political uncertainty,” General Motors Vice President for U.S. sales and operations Kurt McNeil said Tuesday.
The auto industry as a whole isn’t expected to demonstrate the strong sales growth of the first five months due to seasonality in car sales, said Alec Gutierrez, senior market analyst for Kelley Blue Book. Chrysler projected a SAAR of 14.4 million units, well above analyst projections.
Chrysler sales gained 20% in June, marking the 27th month of year-over-year sales growth. The Chrysler, Jeep, Dodge, Ram Truck and FIAT brands all posted gains. Chrysler brand sales rose 63%t, the best June sales since 2008.
“June was another solid month for the Chrysler Group with U.S. sales up 20% and second-quarter sales increasing 24% compared with the same period in 2011,” President and CEO of Dodge Brand and head of U.S. sales Reid Bigland said.
Chrysler has been the only profitable division of Fiat in recent quarters. Strong sales from the American unit could bolster weak European sales for the Italian automaker.
Ford reported June sales rose 7% from the year due to higher sales of trucks and SUVs.
“June was a good month for Ford and a particularly strong month for vehicles like Escape, Fusion, Explorer and F-Series,” said Ken Czubay, Ford’s vice president of U.S. marketing, sales and service.
Ford sales are up 7% for the year so far with 1.14 million vehicles sold, including 207,759 sold in June. The bulk of June sales gains came from SUV sales. SUV sales rose 24.8% while truck sales gained 1.2%. Car sales growth was more modest at just 0.3%.
Sales of Ford’s flagship F-series trucks rose 10.9% with 55,025 sold, the best June sales in five years, indicative of increasing demand for Ford trucks. Car sales were weaker, though, with both the Fiesta and Focus posting losses. However, Fusion sales gained 17.4%.
Ford’s Lincoln brand actually posted a 2.5 percent gain with 7,544 units sold, indicating positive movement.
GM, the No. 1 automaker reported 15.5% year-over-year U.S. sales growth in June and the best sales month for the company since September 2008.
All four of GM’s brands, Chevrolet, GMC, Buick and Cadillac, reported double digit sales gains, with Cadillac leading the pack at 26.8%. Overall, GM sold 248,710 vehicles in June and projected a seasonally adjusted annual rate of sales of 14 million for June, in line with the high end of analyst expectations.
Toyota, Japan’s No. 1 company, said June U.S. sales rose 60.3% compared to the year before, the company announced Tuesday.
The exceptional growth in year-over-year sales likely reflects the company’s continued recovery from supply-chain, manufacturing and inventory disruptions caused by last year’s Japanese earthquake and Tsunami and floods in Thailand.
U.S. auto sales are on pace for the best showing since 2007 and a third straight year of at least 10% gains, only the fourth such streak since the Great Depression, as more-confident buyers return to showrooms.
Bloomberg reported that automakers are adding overnight shifts and cutting workers’ vacations to meet rising demand for light vehicles.
Sales this year may reach 14.3 million cars and light trucks, equal to the first-quarter pace, according to estimates from 14 analysts compiled by Bloomberg. It would be the best full year since 16.1 million in 2007. The same analysts in January were expecting sales this year of 13.6 million before Toyota Motor Corp. and others exceeded projections.
“Even if we stay where we are, it’s a pretty good year,” said Brian Johnson, an industry analyst at Barclays Capital in Chicago, who is predicting full-year U.S. sales of 14.4 million.
Pent-up demand, an improving economy and loosening credit has spurred the better-than-estimated auto sales and helped General Motors Co., Ford Motor Co. and Chrysler Group LLC to first quarter profits that beat analysts’ forecasts even while deliveries fell in Europe.
First-quarter deliveries in the U.S. ran at the strongest pace since the same months in 2008, when sales started at an annualized rate of 15.4 million before collapsing to a full-year tally of 13.2 million, said Kevin Tynan, a Bloomberg Industries analyst based in Skillman, N.J.
U.S. sales of new cars and trucks rose in March, helped by a brighter jobs outlook and rising sales of fuel-efficient vehicles.
New vehicle sales rose 11% at General Motors, 16% at Ford, 25% at Honda and 27% at Nissan, all aided by sales of smaller, more efficient cars and crossovers, which look like truck-based SUVs but are more fuel efficient and nimble because they are built on car underpinnings.
Of major automakers, only Toyota Motor Corp. reported a decline, nearly 6%.
In March, the economy added 216,000 new jobs, bringing the unemployment rate to a two-year low of 8.8%, the Labor Department reported Friday. Companies added workers at the fastest two-month pace since before the recession began in late 2007.
Nearly all companies reported strong sales of small cars during the month.
But truck sales also were healthy in March for just about every manufacturer, a sign that businesses were buying as the economy continues to recover.
George Pipas, Ford Motor Co.’s top U.S. sales analyst, said small car sales shot up in the first part of March and then stabilized in the last three weeks as gas prices leveled off at around $3.50 per gallon. But Pipas said it’s unclear if sales stabilized because of gas prices or if limited selection and availability of small cars dampened sales.
Ford had two months’ worth of the Fiesta subcompact at the beginning of March, for example, but that fell to 40 days’ supply at the end of the month as sales outpaced production. And the earthquake in Japan pinched supply of some small cars made there like the Toyota Prius and Honda Fit.
J.D. Power and Associates predicted that nearly a quarter of vehicles sold to individual buyers were compact or subcompact cars.
February was one of the strongest months in the past year for auto purchases as renewed consumer confidence sent shoppers to car lots, the Los Angeles Times reported.
With most major carmakers reporting Tuesday, February U.S. sales were up more than 20% overall compared with the same month a year earlier to about 1 million vehicles, according to industry estimates.
“The consumer is back to the showrooms,” said Brian Johnson, an analyst with Barclays Capital.
Certainly that was the case for General Motors Co., which on Tuesday said its February U.S. sales rose 45.8% compared with a year earlier to 207,028 vehicles.
The automaker said its retail sales grew by 70% over February 2010 and that its sales to car rental companies and commercial users were about even with the same period a year earlier. The gain in the retail market was the highest year-over-year jump in GM’s history.
“Our plan was to get off to a quick start this year and we did just that,” said Don Johnson, GM’s sales chief. “Having the right vehicles in inventory, combined with aggressive advertising and targeted consumer marketing has been the key to our success in the first two months of this year.”
GM’s robust numbers were helped by “very large incentives offered by the manufacturer for the second month in a row,” Johnson, the Barclays Capital analyst, wrote in a report to investors.
But the analyst said the deals offered by GM don’t signal an outbreak of a broader price war that could kill off industry profits. Johnson noted that GM was “tactically” offering higher incentives while the automaker’s management had recently “reiterated its commitment to keep its incentives in line with the industry for the year.”
In fact, the industry average for incentives was the lowest for a February since 2007, said Jesse Toprak, an analyst at TrueCar.com.
Ford Motor Co. said its total February sales rose 14% compared with the same month a year earlier to 156,626.
Retail sales of Ford’s small cars — Fiesta and Focus — were more than double year-ago levels, which the automaker said could be a result of rising gas prices.
Nissan North America, Inc. said its sales rose 31.6% in February to 92,370 vehicles. The figure set a Nissan record for February U.S. sales.
Toyota Motor Corp. said its February sales rose 41.8 percent41.8% to 141,846 vehicles. Johnson of Barclays Capital cautioned that the gain was deceptive, “the result of a very easy comparison versus last year, when its sales suffered from safety concerns.”
Toyota has issued more than 13 million product recalls since September 2009 in the U.S. alone, including the recall of more than 2 million vehicles to correct problems with floor mats and other issues that could cause unintended acceleration. Toyota briefly stopped selling many of its popular models a year ago to fix sudden acceleration problems.
Still Toyota officials were pleased with the result.
“After two months of improving sales, we feel good about the way 2011 has started,” said Bob Carter, a Toyota vice president.
Chrysler Group said its February sales rose 13% to 95,102 vehicles.
Analysts noted that it was a strong month overall for retail car sales.
“Consumers hit the showrooms during the Presidents Day weekend at a rate that well outperformed February of 2010,” said Jeff Schuster, executive director of global forecasting at J.D. Power & Associates. “The strong retail performance is pushing the (annual) retail selling rate to a level that is approaching 11 million units.”
After suffering through nearly two years of historically low sales, auto dealers were happy to see the flood of customers.
“We are trending to do 140% over February 2010. It is nice to see sales come back,” said Beau Boeckmann, vice president of Los Angeles-area dealer Galpin Ford, the nation’s largest Ford dealership.
“Our biggest hits right now are the Edge crossover and the Fusion sedan and the hybrid. The new Fiesta and the new Explorer are also doing extremely well,” he said.
Schuster estimated that, including fleet sales, automakers were at an annual rate of about 12.6 million vehicles. GM estimates the number to be as many as 13 million vehicles. Most automakers are forecasting total sales of about 13 million, up from 11.6 million last year.
Despite wintry weather across much of the nation, U.S. consumers were in a car-buying mood last month, helping to boost most automakers’ January sales by double-digit percentages compared to a year ago, Daily Finance reported.
Among the first to report were the nation’s two largest automakers, General Motors (GM) and Ford Motor, which said improved demand was driven largely by an increase in retail sales, as consumers put aside concern about the U.S. economy and rising gas prices. GM said its retail sales rose 36%, while Ford reported a retail sales gain of 27%.
Overall sales, including those to fleet customers such as rental-car agencies, rose 21.8% at GM. Among its four core brands — Buick, Cadillac, GMC and Chevrolet, Detroit-based GM said total sales rose 23%. Ford registered a 13.3% rise in overall sales.
Banner Year Ahead?
Chrysler Group, the smallest of the Detroit Three, said its overall sales rose 23% to 70,118 on strong demand for Jeep-brand vehicles, and other trucks and sport-utility vehicles. Chrysler, which just completed an ambitious program to overhaul 75% of its lineup, said Jeep sales rose 47% in January, led by a more than two-fold increase in sales of the recently redesigned 2011 Jeep Grand Cherokee SUV.
Dodge and Ram divisions also saw sales increase, averaging 20% between them, but demand at the Auburn Hills, Mich.-based company’s namesake Chrysler division slipped 9%. Many of the division’s new offerings, including the 200 and 300 sedans, have only recently begun to hit dealers’ lots after undergoing extensive revamping.
The new models and improved sales are the start of what Chrysler hopes will be a banner year for the company, less than two years after it exited bankruptcy. “We have started the year on a strong note,” Fred Diaz, lead executive for U.S. sales at Chrysler, said in a statement. “And we intend to continue gaining sales momentum as our new 2011 models hit dealer showrooms during this first quarter.”
“Tremendous Amount of Momentum”
Analysts estimate that sales of vehicles in the U.S. in January reached the second-fastest pace in 17 months, according to a consensus estimate of six analysts, Bloomberg News reported. Sales likely reached an annual rate of 12.4 million last month, after adjusting for seasonal variations. That compares to an annual sales rate of 11.6 million last year.
That’s good news for GM, which appears to be on a roll following its initial public offering of stock last November. New products are pulling consumers into GM showrooms, Rebecca Lindland, an analyst with IHS Automotive, told Bloomberg News. “They have a tremendous amount of momentum.”
Ford, however, disappointed Wall Street, missing sales forecasts of about 134,000 cars and trucks, according to Jesse Toprak, senior analyst at TrueCar.com.
In an interview, Toprak says Ford will struggle to beat year-over-year sales comparison in the coming months because it had much of the sales momentum in 2010, as GM and Chrysler struggled to regain their footing after exiting bankruptcy and Toyota Motor (TM) dealt with a string of safety recalls.
“This year, [Ford's] momentum will continue,” Toprak says. “It won’t be as robust as last year, but that doesn’t mean they’re doing things wrong.”
Toyota’s First Increase Since September
Among Asian manufacturers, Nissan Motors (NSANY), which recently eclipsed Honda Motor (HMC) as Japan’s No. 2 automaker, reported its U.S. sales rose nearly 15% to 71,847 vehicles. Sales at the company’s Nissan division gained 15.4% for the month, while those at its luxury Infiniti unit picked up 10.3% from a year ago.
Toyota, which recently surrendered its title as the nation’s No. 2 supplier of automobiles because of its recall woes, reported its sales rose 17.3%, compared to a year ago, marking the first month-to-month sales increase it has seen since September. In total, the beleaguered company sold 115,856 units in January.
“We are encouraged by last month’s results, which show continued strength in both the passenger and light truck segments,” said Bob Carter, a vice president at the company’s U.S. sales unit. Sales of Toyota brand cars and trucks rose nearly 24%, led increased demand for compact Corolla and midsize Camry sedans, along with several sport-utility models, the company said. Demand for luxury Lexus models, however, sank 17.1%.
Honda, the U.S.’s No. 4 automaker, said its sales increased 13%, largely on strong demand for the Fit subcompact, Odyssey minivan and several SUV and truck models. Demand for the popular Accord line of passenger cars, however, slipped 28%. In total, Honda sold 76,269 vehicles last month.
Shortages at VW
Subaru, the niche maker of all-wheel-drive vehicles, saw its sales rise 20.8% in January above last year’s levels. Subaru, which set a sales record in the U.S. last year, said it is “well placed” to set another record in 2011. Mazda Motor said its U.S. sales fell 9.1%, mainly attributable to “substantial reduction in fleet sales this month.”
South Korean automakers Hyundai Motor and Kia Motors continued to make inroads into the U.S. market last month, after setting sales records last year. January sales at Hyundai rose 22%, while those at Kia climbed 25.6%
German automaker Mercedes-Benz reported sales of passenger cars and light trucks, including Sprinter delivery vans and Smart commuter cars, rose 14% to 17,631 units, while January sales at Volkswagen (VLKAY) climbed just 2%, which the company attributed to “some product shortages on key models.”
VW announced Monday that the new U.S.-built Passat midsize sedan would begin rolling off the company’s newly built assembly line in Chattanooga, Tenn., in March and go on sale sometime after June.
Overall, consumers paid less for their vehicles last month, compared to a year ago. The average transaction price fell $162, or 0.5%, compared to January 2010, according to TrueCar.com. The decline was led by increased demand for small cars and compact SUVs, which are less expensive.