Tag Archive | "auto sales"

Penske Automotive 3Q Earnings Soar on Higher Sales

BLOOMFIELD HILLS — Penske Automotive Group, Inc. reported sharply higher earnings as the dealership group sold more cars at higher prices throughout the quarter.

Penske announced Wednesday that its net income rose to 61 cents per share from 33 cents per share a year earlier, a jump of 85 percent. Revenue rose 11 percent to $2.95 billion from $2.67 billion.

The results included an income tax benefit of 12 cents per share. Excluding that benefit and a loss of 1 cent per share from discontinued operations, the company earned 50 cents per share, an increase of 31 percent compared with adjusted earnings from last year’s third quarter, reported The Detroit News.

Analysts expected the company to earn 42 cents per share, after removing the effects of special items, on revenue of $3.04 billion.

Separately, the company announced Wednesday it will raise its dividend to 9 cents per share, an increase of 12.5 percent. The dividend is payable Dec. 1 to shareholders of record on Nov. 14.

Penske owns 170 auto dealer franchises in 17 U.S. states and Puerto Rico and 155 dealer franchises abroad, mostly in the United Kingdom. The company sold 72,204 cars in the quarter, up from 67,994 in the same quarter last year.

The company’s sales of new cars slipped slightly, but the prices for those cars rose 8 percent, to $36,236 per car. Gross profit per new car rose 15 percent, to $3,238.

In a statement, Penske Automotive Group Chairman Roger Penske said the company’s new car sales where held back because Japanese automakers are still not able to return to normal production after the March earthquake and tsunami in Japan. That left Penske with fewer new vehicles to sell. He expects the automakers’ production to fully recover by the first quarter of next year.

Used car volumes rose 16 percent. Used car prices rose 2 percent to $26,404 per car. Gross profit per used car rose 3 percent to $1,978.

Revenue at dealerships open at least a year rose 6.4 percent. This measure is considered a key gauge of a retailer’s performance because it excludes results from stores that open or close during the year.

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Auto Sales Reach an 8-Month High, Helped by Stable Gas Prices

DETROIT — Consumers took advantage of stable gas prices and bought more trucks and sport utility vehicles, which helped push up the sales of new automobiles in the United States to an eight-month high in October.

Automakers said Tuesday that the annual selling rate for the month was slightly above 13.2 million vehicles, the best performance by the industry since February, reported The New York Times.

A big contributing factor was a surge in sales of pickup trucks at General Motors, Ford and Chrysler. The auto companies also reported strong sales of traditional S.U.V.’s and crossover models.

Over all, the industry sold about one million vehicles in the month, a 7.5 percent increase from October 2010.

Besides the relative stability of fuel prices, analysts attributed the strength of the truck and S.U.V. market to a need for consumers and corporate fleets to begin replacing older vehicles.

“There are a growing number of consumers for whom a new vehicle is becoming a necessity,” said Jessica Caldwell, an analyst with Edmunds.com, an auto research Web site.

Sales of pickup trucks rose about 9 percent in October over the same month year ago, and S.U.V. sales climbed about 8 percent, according to the Autodata Corporation, a research firm.

About 53 percent of all vehicles sold during October were trucks and S.U.V.’s. Auto executives said part of the demand was seasonal, as consumers bought more rugged products in anticipation of winter driving conditions.

But the across-the-board rise in sales also showed that consumers were becoming less fearful of spikes in gas prices, and in many cases were choosing the utility of trucks and S.U.V.’s over the higher fuel economy provided by small cars.

“Historically, we have seen that consumers change their buying habits for three to four months when fuel prices are up,” said Rebecca Lindland, an analyst with the research firm IHS Automotive. “There’s still an awareness of gas prices, but at the end of the day consumers are proving that small cars aren’t for everybody.”

Chrysler reported the biggest gains of the Detroit automakers during the month, with a 27 percent increase over the same period a year ago.

The increase was partly a result of new car models like the Chrysler 200 midsize sedan and the tiny Fiat 500 subcompact. But Chrysler also reported a 21 percent increase in sales of Ram pickups, as well as robust sales for S.U.V.’s ranging from the compact Jeep Compass to the seven-passenger Dodge Durango.

By comparison, sales rose about 6 percent at Ford and 2 percent at G.M. Both companies reported increases in full-size pickup sales, which can be interpreted as a positive sign for the overall economy because those models are frequently purchased by contractors and builders.

Ford also said its S.U.V. sales climbed 38 percent during October from a year ago, led by big increases in purchases of the compact Escape model and the midsize Explorer.

Foreign automakers had mixed results during the month. Volkswagen led with a 40 percent increase, followed by Hyundai with a 23 percent gain and Nissan with an 18 percent improvement. Honda sales were flat, and Toyota said its sales declined nearly 8 percent.

Many Japanese models were in short supply during the summer because of production disruptions related to the earthquake and tsunami in March. Inventory levels have recently improved, and some shoppers who put off purchases are now returning to showrooms, analysts said.

The industry’s positive showing could carry over through the end of the year, particularly as consumers continue to replace older-model vehicles.

“The relatively strong selling rate seen in October suggests that the fourth quarter may close stronger than previously expected,” said Jeff Schuster, head of forecasting at J.D. Power & Associates.

Auto sales have been steadily rising since the spring, despite continued high unemployment and low levels of consumer confidence. Many Americans are now replacing their vehicles.

In 2007, the average age of vehicles nationwide was 9.8 years. But that figure has now climbed to 10.7 years, according to Edmunds.com.

“We’re entering a period now where vehicles need to be replaced because they are just getting too old,” Ms. Lindland said. “Replacement demand will be a key to ending the year on a strong note.”

The industry continues to be a bright spot in an otherwise uncertain economic picture nationally, analysts said. October was the eighth consecutive month in which auto sales topped one million.

“That’s pretty resilient when you consider the onslaught of negative news,” said Peter Nesvold, an analyst with Jefferies & Company. “This is not a $500 iPhone. This is a big-ticket, consumer discretionary purchase.”

While G.M.’s overall sales were somewhat below expectations, October turned out to be the best month yet for the Chevrolet Volt, the company’s plug-in hybrid electric car. G.M. said it sold 1,100 Volts during the month, compared with its chief competition, the all-electric Nissan Leaf, which had 849 sales.

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Artful Questioning

Many automotive salespeople, who haven’t yet reached the professional stage, think professional selling is exactly the opposite of what it really is. They get started. They learn the product and what the special offers are, then push them on the next client who comes into the dealership.

When you entered the selling field, you may have thought, “Now my job is to talk and talk and talk.” So off you go. “Here it is folks. The single best answer to your driving needs. Oh, you’re going to love it. You’d better get one now before we run out of inventory!”

The professional automotive salesperson, the true champion, realizes that people have two ears and one mouth, and that they should be used in those proportions. This means that after talking for 10 seconds, you switch your mouth off, switch your ears on, and listen for 20 seconds. This also means that instead of overwhelming your future client with your knowledge of the automotive industry and your particular line of vehicles that, you encourage them to tell you what they know, what they need and what they want.

Let’s compare the two methods.

The average salesperson sounds something like this:

  • “This is the best truck there is on the market today. Nothing can touch it. We’ve also got the best deals because we’re miles ahead of the competition. You’d might as well get it now and not waste your time looking any further.”
  • “Our dealership will do more for you than any of the others. You really should buy from us.”
  • “This special pricing is only available for a few more days. Why waste your time shopping around? You can’t get anything like this for less.”

When salespeople say things like that, they’re doing nothing more than adding to the old stereotype of car salespeople as being right up there with lawyers on the list of people you least want to spend your time with.

When they use such aggressive methods, what are they doing? They’re pushing, aren’t they? They’re nagging, pleading, arguing. They’re telling potential clients things they may not care to hear. They’re trying to ram obvious self-serving statements down the potential clients’ throats. In effect, they are saying, “I’m out to make you buy something. The only reason I’m doing that is to put money in my pocket, and I don’t care whether what you buy helps you or not. I’ve got a quota to meet.”

True champions, those who make successful long-term careers in the automotive business realize that telling isn’t selling. Champion salespeople never make customers feel they’re being pushed for the simple reason that they never push. What they do instead is lead. They find out by asking questions where the buyer wants to go. Then, they take them there.

Champions lead their prospects from the initial contact to happy involvement in new or used vehicles by not talking all of the time, but by listening most of the time, and by asking artful questions. In all this alert and pointed questioning, the true professional maintains a friendly attitude of interest and understanding that encourages the prospect to open up and give the desired information freely.

They ask questions about the current vehicle or vehicles they own. They ask about past vehicles the clients may have loved. Current needs as to length of time on the road, number of passengers, cargo space requirements, safety and economy are all considered. Top professionals come across as expert advisors whose only focus is finding the right vehicle at the right investment involving the shortest time period possible. It’s all about the time and convenience of the client.

Have you ever been surprised at how freely you’ve talked to certain salespeople before buying from them? They were alert and interested. You felt comfortable with them. Recalling those conversations, you may think you were leading and the salesperson was following. Superficially, that may have been true. In a deeper sense, however, that professional salesperson was leading all the way and you were following all the way.

How did that happen? The champion sales professional encourages you to start off in your direction of interest. Once you set your direction, he or she gets smoothly in front and begins to lead you toward any of several open paths to purchase. When artful questioning reveals which of the several paths is best, the champion guides you smoothly and warmly to the best solution they have to offer for your needs. Because you don’t feel you’re being sold, you are choosing to own!

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AutoNation CEO: US Auto Sales on Road to Recovery

DENVER – The leader of the largest U.S. auto dealership group, AutoNation Inc, predicts U.S. automobile sales will accelerate the last three months of 2011 and to rise in each of the next two years.

AutoNation’s Chief Executive Mike Jackson said on Thursday he expects U.S. sales of cars and light trucks to reach a 13 million vehicle annual rate by the end of the year.

“The auto recovery is going to resume probably in October,” Jackson said in an interview with Reuters. “We’re on a journey back to 16 million, 17 million. I can’t tell you exactly when we’re gong to get there, but we are going to get there.”

Jackson spoke on the sidelines of a meeting of AutoNation dealers and employees from Colorado in downtown Denver led by the CEO as well as AutoNation President Mike Maroone that was part business and part rally.

Jackson said it was too early to project U.S. auto sales for 2012. He said he wants to wait to see the trajectory of the recovery near the end of the year.

However, a slide Jackson showed in a presentation to the roughly 200 employees on Thursday projected U.S. auto sales at about 14.2 million vehicles in 2012 and 15.9 million in 2013.

Research firm J.D. Power and Associates expects U.S. auto sales of about 12.6 million vehicles in 2011, about a 9 percent increase over 2010. J.D. Power expects U.S. auto sales to reach 14.1 million in 2012.

Jackson said much of the U.S. auto industry will have recovered by October from the March earthquake and tsunami in Japan that limited inventory for Toyota Motor Corp, Honda Motor Co, and, to a lesser degree, Nissan Motor Co Ltd.

The 62-year-old Jackson said he is “convinced” U.S. new auto sales will return to more than 16 million per year in part because consumer auto loans have become available after the 2008-2009 recession quicker than home loans.

“We have reasonably good financing available for our customers, not what we had in 2005, 2006, 2007, but we may never have that again,” Jackson said, adding that there is pent-up demand to drive sales.

Maroone and Jackson said they do not expect a “price war” among automakers and dealers as they try to appeal to consumers in the fourth quarter.

“The whole business is much more disciplined, rational, much more focused on the long-term,” Jackson said.

He pointed to the discipline on incentives by the Detroit automakers during the inventory woes of Toyota and Honda.

“Incentives are going to be better than they have been for the last six months,” Jackson said, adding that they would not approach a level that would trigger a price war.

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August Auto Sales Perk Up

Several major auto makers reported strong gains in U.S. new-vehicles sales for August, lifting confidence the auto industry’s recovery is continuing despite worries about the economy.

Chrysler Group LLC said on Thursday its sales leaped 31 percent in August, while General Motors Co. and Nissan Motor Co. each reported increases of just under 20 percent. Ford Motor Co. posted an 11 percent gain reported The Wall Street Journal.

In total, August sales rose 7.5 percent to 1,072,283 cars and light trucks, according to researcher Autodata Corp. The industry’s gain was held back by Toyota Motor Corp. and Honda Motor Co., which suffered declines of 13 percent and 24 percent, respectively, as continuing shortages of cars and trucks damped their sales.

Most important for the industry and U.S. economy, Chrysler and GM said their sales were driven by purchases by individuals rather than fleet sales—a sign that consumer demand is holding firm. Chrysler’s sales to individual customers at dealerships rose 42 percent. GM’s retail sales grew by 22 percent.

“Consumers are being cautious, but they are not retrenching,” Don Johnson, GM vice president for U.S. sales operations, said in a conference call.

The annualize pace of sales in August was 12.12 million vehicles, Autodata said, down from July’s 12.23 million but up from the year-ago figure of 11.47 million.

Ford economist Jennifer Lin said she expects the sales rate to improve in the remaining months of the year. “We do see that the sales pace will continue to increase from this point on because although the economy is slowing, it is not contracting,” she said.

In the first quarter, auto sales were on a pace to exceed 13 million cars and trucks for the full year. But Japan’s March earthquake disrupted the supply of Japanese-brand vehicles and the sales pace fell below 12 million vehicles. In recent weeks, American consumers have been buffeted by worries about declines in the stock market, the fight over the U.S. debt ceiling, and the European debt crisis.

In August Chrysler sold 130,119 vehicles. Bill Golling, owner of a Chrysler dealership in Birmingham, Mich., said he is more optimistic about sales through the rest of the year. “Going into September, I think it’s going to be a little better than August,” he said.

While the future course of stock market and the overall U.S. economy remain uncertain, the industry is helped because many consumers are now driving older cars and simply have to buy replacements. “I really feel pretty good going into the third and fourth quarters,” Mr. Golling said.

GM sold 218,479 cars and trucks in August, up 18 percent from a year ago. GM said strong sales of its recently launched Chevrolet Cruze compact car helped drive the increase.

Toyota went in the other direction. Its sales fell to 129,483 vehicles, pulling its market share down 2.8 percentage points to 12.1 percent. Honda sold 82,321 vehicles, leaving its market share at 7.7 percent, more than three points below its year-ago level.

Ford sold 174,800 cars and light trucks, an 11 percent rise. It was boosted by a 25 percent increase in sales of by its upscale Lincoln brand.

Nissan said its August sales surged 19 percent to 91,541 compared to a year earlier. “I’m very encouraged by August. Had we not had [Hurricane] Irene, it would have been a fantastic month. I think September will be very strong,” said Al Castignetti, vice president of Nissan North America. Mr. Castignetti said the storm likely reduced sales by about 3,000 for the month.

Hyundai Motor Co. said its U.S. sales rose 9 percent to 58,505 vehicles. Volkswagen AG’s rose 10 percent to 25,232 cars and trucks.

GM’s Mr. Johnson said a slow recovery of the auto market appears on track and he reiterated a full-year seasonally adjusted annual rate of sales at the “low end” of a range of between 13 million and 13.5 million vehicles.

The increases signaled the industry shook off a weak July, when overall U.S. sales rose just 0.9 percent from a year ago.

Car-shopping website Edmunds.com last week predicted overall U.S. new-vehicle sales would jump 9 percent in August from the prior year. Edmunds said while stronger buying conditions are pushing customers to purchase new vehicles, a weak economic landscape is a looming concern.

The past month had 26 selling days, one more than August of last year.

GM shares were off 4.2 percent, or $1 apiece, at $23.03, and Ford declined 2.4 percent, or 27 cents, to $10.85, both in 4 p.m. New York Stock Exchange trading.

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U.S. Auto Sales Estimates Cut as Confidence Slows Rebound

Analysts are reducing estimates for U.S. automobile sales for 2011 and 2012, citing weak consumer confidence that has slowed the pace of recovery since May.

J.D. Power & Associates lowered its estimate for U.S. auto sales in 2011 by 300,000 light vehicles to 12.6 million, the Westlake Village, California-based researcher said today in a statement. J.D. Power reduced its estimate for next year by 600,000 cars and light trucks to 14.1 million, reported Bloomberg.

The reduction by J.D. Power follows analysts at IHS Automotive in cutting expectations below the sales forecasts given by General Motors Co. and Ford Motor Co., the largest U.S. automakers. JPMorgan Chase & Co., Goldman Sachs Group Inc. and RBC Capital Markets LLC also shaved estimates this month.

“The thought of a second-half recovery is just not in the cards,” Jeff Schuster, J.D. Power’s executive director of global forecasting, said today in a phone interview. “It really comes down to consumer confidence and consumers just don’t have any right now. There just really isn’t a strong reason to go make that big-ticket purchase.”

Consumer confidence in the U.S. economic outlook slumped in August to the lowest level since the recession, raising the risk that spending will dry up. The Bloomberg Consumer Comfort Index’s monthly expectations gauge dropped to minus 34, the weakest since March 2009, from minus 22 in July.

Applications for unemployment benefits climbed last week to the highest level in a month, Labor Department figures showed today in Washington.

Goldman Sachs today lowered its 2012 U.S. auto sales estimate by 1 million light vehicles to 13.5 million. The New York-based investment bank sees 12.8 million deliveries this year. RBC Capital earlier this week lowered its estimates for 2011 by 200,000 units to 12.5 million and by 700,000 to 13.3 million for next year.

“Fragile U.S. consumer sentiment and recently tempered economic expectations” led to the reductions, Seth Weber, an RBC Capital analyst based in New York, said in an Aug. 16 research note.

IHS Automotive reduced its estimate for U.S. auto sales in 2011 by 200,000 units to 12.5 million light vehicles, Rebecca Lindland, an IHS analyst, said in an Aug. 11 phone interview.

IHS cut its estimate for 2012 deliveries in the U.S. to 13.5 million vehicles, from 14.7 million, Lindland said. The Lexington, Massachusetts-based researcher also lowered its estimate for 2013 light-vehicle sales to 15 million from 15.5 million.

Himanshu Patel, a JPMorgan analyst, lowered his 2011 and 2012 estimates by a combined 700,000 vehicle sales, to 12.8 million this year and 13.5 million next year, in an Aug. 5 note.

GM and Dearborn, Michigan-based Ford forecast at least 13 million new-vehicle sales in 2011, including medium- and heavy- duty trucks. The U.S. averaged annual light-vehicle deliveries of 16.8 million vehicles from 2000 to 2007, according to Autodata Corp., a Woodcliff Lake, New Jersey-based research company.

“There’s a lot of turmoil in the business and turmoil means uncertainty, so we’re a little unsure of these numbers,” Chief Executive Officer Dan Akerson of Detroit-based GM, told analysts Aug. 9.

GM fell $1.34, or 5.4 percent, to $23.60 at 4 p.m. in New York Stock Exchange composite trading, the lowest since its initial public offering in November. Ford declined 73 cents to $10.38. The shares have plunged 38 percent this year.

J.D. Power sees a 12.1 million seasonally adjusted annualized rate for August. Analysts and automakers had been predicting a “snap back” in demand once inventories recovered from the March earthquake and tsunami in Japan, which disrupted production and led to shortages of parts and finished vehicles.

“We’re not seeing that snap back, and given all the variables out there it’s a lower probability that we’re going to see that happen this year,” Schuster said today.

Sales ran at a seasonally adjusted annualized rate of 12.2 million through the first two weeks of August, Edmunds.com said in an e-mailed statement. The Santa Monica, California-based researcher still predicts 12.9 million deliveries this year and 13.9 million in 2012.

J.D. Power’s estimate for full-year sales assumes that the industry will average a 12.8 million seasonally adjusted annualized rate in the last four months of the year, Schuster said. Lower gasoline prices and higher spending on sales incentives may help the sales pace accelerate to those levels late this year, he said.

If the pace of deliveries stays about flat, sales may finish the year at 12.4 million, according to J.D. Power’s estimates. “If August comes in at the level we’re expecting, that gives us a really clear indication that we’re running out” of time in 2011 “to get going again,” Schuster said.

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