Tag Archive | "new vehicle sales"

Auto-Sales Optimism Fades

DETROIT—Just a few months ago, optimism was rising in the auto industry that new-vehicle sales would make a strong rebound this year after falling to historic lows in 2009, reported The Wall Street Journal.

New data, however, suggest the recovery isn’t as strong as it appeared earlier in the year. The increase in auto sales in the first five months of 2010 has been driven by higher sales to rental-car companies and other commercial fleets—not sales to consumers, who are now showing signs of more pessimism about the economy, as well as a halting interest in buying new cars.

“The industry is on the mend but there are reasons for caution,” said John Hoffecker, a managing director at AlixPartners LLP, a consulting firm that recently surveyed consumers as part of its annual study of auto-industry trends.

“We’re still waiting for consumers to come back into dealerships,” Hoffecker said in an interview.

In the year’s first five months, auto sales rose 17 percent from a year earlier to 4.6 million cars and light trucks, according to Autodata Corp. But the rise has been fueled by commercial customers that had all but stopped buying last year during the recession and are now finally restocking their fleets. Fleet sales are up 32 percent, while sales to individual customers at dealerships have increased just 13 percent.

More importantly, retail sales remain at low levels compared with historical standards. Since 1992, retail customers have reliably accounted for sales of at least 10 million cars and light trucks a year in the U.S. That string ended last year amid the recession. According to analysis by AlixPartners, this year’s sales may not surpass 10 million, either.

In the first five months of the year, the annualized pace of retail auto sales peaked at 9.5 million cars and trucks in March, when consumer purchases were spurred by heavy incentives offered by Toyota Motor Corp., according to AlixPartners’ new auto-industry study. The retail-sales pace in May was just 8.9 million vehicles.

Concern about weak retail sales hasn’t escaped auto makers. George Pipas, the top sales analyst at Ford Motor Co., said he is seeing evidence that consumers are deferring decisions on major purchases, in large part because home values and income growth haven’t rebounded.

“These are two things that really have to happen before you will see auto sales move up more significantly,” Pipas said.

Earlier in the year, the recovery in auto sales appeared to be stronger. The role of fleet sales in the rise wasn’t clear at the time because some auto makers don’t break out their fleet and retail totals, making industry figures hard to come by.

Then in March, sales rose 24 percent and hit an annualized rate of 11.8 million—the highest since September 2008, except for when the government’s cash-for-clunkers program caused a spike last August.

The strong response to Toyota’s incentives seemed to indicate consumers were again willing to spring for new rides. Instead, the incentives now look like a one-time boost whose effect has now faded, said AlixPartners’ Hoffecker. “We felt better in the January-February time frame,” he said.

According to the AlixPartners study, only about 6 percent of consumers say they expect to buy a new car during the next six months. That is below the historical average of 7 percent, and not high enough to drive a robust rebound.

While vehicle sales aren’t rising as fast as the industry would like, Hoffecker said auto makers’ finances are nevertheless strong. The deep restructurings by General Motors Co., Chrysler Group LLC and others have enabled them to earn money even at low levels of new-car sales.

“From a profit standpoint, the industry is still in good shape,” he said. “But we need the broader economy to kick in before it’s a full green light.”

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Chrysler Sales up 33% for May; Ford, GM Rise 23%, 16.6%

Chrysler Group LLC, Ford Motor Co. and General Motors Co. posted double-digit sales increases last month thanks to new vehicles and strong fleet sales, The Detroit News reported.

Chrysler led Detroit’s Big Three automakers with a 33 percent increase compared to a year ago, when it was in bankruptcy. Ford sales rose 23 percent, and GM’s rose 16.6 percent.

Excluding castoff brands Pontiac, Hummer and Saturn, sales of Chevrolet, Buick, GMC and Cadillac vehicles rose almost 32 percent compared to May 2009.

Last month, GM sold 223,822 vehicles and posted the fifth consecutive month of double-digit sales gains for the four core brands.

Ford, meanwhile, sold 192,253 vehicles last month, and the Dearborn automaker marked the sixth consecutive month of at least a 20 percent sales gain.

Toyota Motor Corp. reported a 6.7 percent rise in May sales to 162,813 vehicles. The Toyota division posted a 3.6 percent sales increase to 140,597 cars and light trucks, while premium Lexus sales jumped 31.3 percent to 22,216 vehicles.

Nissan Motor Co. sold 83,764 vehicles last month, a 24.1 percent increase, while Honda Motor Co.’s sales rose 19.1 percent to 117,173 vehicles.

Hyundai Motor Co. reported a 33 percent sales jump to 49,045 vehicles in May, bolstered by strong demand for the new Sonata and Tucson models.

Chrysler sold 104,819 vehicles, the first time the Auburn Hills automaker has crossed the 100,000 mark since March 2009.

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Toyota, Honda Lead Increase in Japan’s May Car Sales on Subsidy

Toyota Motor Corp. and Honda Motor Co., Japan’s two biggest automakers, led the tenth straight increase in the nation’s monthly auto sales as government incentives boosted demand, Bloomberg News reported.

Sales of cars, trucks and buses, excluding minicars, rose 28 percent to 228,514 vehicles in May from a year earlier, the Japan Automobile Dealers Association said in a statement today. Toyota, the world’s largest carmaker, sold 112,174 units, excluding Lexus-brand cars, up 39 percent.

Japan’s auto sales began recovering from a year-long slide in August as government rebates and tax cuts for fuel-efficient vehicles rekindled demand. The incentives helped raise sales by about 600,000 vehicles last year and may increase them by about 900,000 this calendar year, the Japan Automobile Manufacturers Association said in December.

“Car sales, especially of hybrids, have been doing very well because of the incentives,” said Yoshiaki Kawano, an analyst at auto consulting company CSM Worldwide Inc. in Tokyo. “Some carmakers are waiting until after the program expires to bring out new models to offset the expected drop.”

May sales rose 16 percent at Honda, while Nissan Motor Co., the nation’s third-largest automaker, sold 9 percent more vehicles.

Under a government program started in June, consumers in Japan can apply for a rebate of as much 250,000 yen ($2,747) subsidy if they scrap a car more than 13 years old to buy a new one, and 100,000 yen for a new car purchased without scrapping an old one. The program expires at the end of September.

Electric, hybrid, natural-gas, and some diesel vehicles also qualify for an exemption from the country’s weight and purchase taxes.

Japan’s vehicle sales may fall 4.9 percent to 4.65 million units for the fiscal year that began April 1 as the government subsidy program’s expiration discourages buyers, according to the automakers association.

Toyota shares fell 0.8 percent to 3,255 yen as of 2:05 p.m., while shares of Honda dropped 0.6 percent to 2,754 yen in Tokyo. Nissan shares fell 1.7 percent to 653 yen.

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Ford, Honda Discounts Drive Longest Streak of Gains in 10 Years

Ford Motor Co., Honda Motor Co. and Nissan Motor Co. added rebates and discounts to attract buyers over the Memorial Day holiday weekend, driving what may be the longest streak of sales increases in almost 10 years, reported Bloomberg News.

Industrywide deliveries probably reached a seasonally adjusted annual rate of 11.2 million light vehicles in May, according to the average of eight analysts’ estimates compiled by Bloomberg. If sales did exceed the 9.9 million rate from a year earlier, it would mean eight straight months of increases for the first time since a stretch that ended in June 2000, according to Bloomberg Data.

Sales during the Memorial Day weekend in the past three years ran about 40 percent higher than the typical May weekend, and sales on the last day of the month were more than double the average day, according to researcher Edmunds.com.

“This weekend’s activity aligns with the start of the big summer selling season,” said Jim Sanfilippo, chief operating officer of Innocean Worldwide Americas LLC, Hyundai Motor Co.’s in-house advertising agency.

Higher discounts may have been needed to help offset the weak retail environment, said Jeff Schuster, executive director of J.D. Power & Associates in Troy, Michigan. Sales to rental- car companies and discounted fleet purchasers may have also boosted results, scheduled to be announced tomorrow, he said.

Ford added $500 rebates May 27 on the namesake brand’s Focus car, Edge sport-utility vehicle and F-150 pickup, said Robert Parker, a spokesman. The discounts also applied to the automaker’s Lincoln MKS and MKZ sedans and MKT and MKX sport- utilities.

Nissan added a $500 discount for most of its namesake brand vehicles from May 28 through yesterday. Honda’s luxury Acura brand is offering lease deals on all models with no down payment and no security deposit, said Chris Martin, a spokesman. The offer started May 28 and runs through July 6.

The annualized rate of sales in the month may match the 11.2 million pace in April, according to Autodata Corp. in Woodcliff Lake, New Jersey.

Ford’s sales in the month may have gained 10 percent or more, and the industry rate could be in the low 11 million vehicle range, Mark Fields, the company’s president of the Americas, said May 24. The Memorial Day weekend would have an “outsized impact” on May’s total, Fields said.

Ford’s May sales probably rose 16 percent from a year earlier, according to analysts surveyed by Bloomberg. The company’s market share should continue to grow if it performs as expected, Fields said.

Honda’s U.S. sales may have increased 22 percent from last May, according to Edmunds.com, which predicted an 11 percent gain by Nissan and 28 percent growth for Hyundai.

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Boost Expected in May Auto Sales

May auto sales are expected to show a big improvement over last year’s dismal levels, but the recent gyrations on Wall Street appear to have tempered car buyers’ hopes that the U.S. economy was out of the woods, The Detroit News reported.

“There was a lot of extreme volatility in the financial markets in May, which caused consumers to hesitate,” said Jesse Toprak, analyst at the pricing firm TrueCar.com.

He predicts sales will total 1.05 million cars and light trucks, up 13.6 percent from May 2009 when the industry was deep in the doldrums, with uncertainty about the fate of Chrysler LLC and General Motors

But a recent recovery in demand appears to have lost some momentum, Toprak said. He expects the selling pace in May to have slowed to 11 million vehicles, on an annualized basis, from 11.2 million in April and 11.8 million in March.

Other May estimates are higher, but only slightly. Automotive research site Edmunds.com predicts the seasonally adjusted annualized rate (SAAR) of sales will be 11.4 million, while Bank of America — Merrill Lynch’s forecast is for a 11.3 million SAAR. Citigroup’s Citi Investment Research estimates this month’s selling rate at 11.2 million vehicles — level with April.

Still, the comparison with last May will show a dramatic recovery from the treacherous environment in the first half of 2009.

Edmunds estimates double-digit gains for all the major players except for Toyota Motor Corp., which it predicts will show a year-over-year sales increase of only 7.5 percent.

The final result will hinge on the turnout for the traditional Memorial Day sales. Forecasts are calling for fine weather in most regions of the country.

“This month hasn’t been particularly good for the car business so far, but we anticipate that the holiday weekend will more than make up for it,” said Jessica Caldwell, director of industry analysis at Edmunds.

Longer term, demand is expected to recover because the average age of American vehicles is approaching 10 years, which is historically very old. Several surveys suggest that pent-up demand is building, Citi said in a research note.

“Precisely timing the inflection point of the cycle is challenging since vehicle purchasing can be deferred now more than ever — cars last longer, households (are) more saturated — creating an unusually high margin of error,” wrote Citi analyst Itay Michaeli. “The recovery largely becomes a question of when, not if.”

Automakers are responding to the near-term skittishness provoked by the dizzying drops on Wall Street by keeping incentives high.

Toprak estimates incentives this month will average $2,915 per vehicle, up 8.3 percent from April levels and 1.7 percent above year-earlier levels.

“Automakers realize that a lot of consumers are hesitant,” he said. “Demand is still very fragile, and incentives done correctly are still an effective way to get people into showrooms.”

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Memorial Day Weekend Sales Expected to Boost Industry to 11.4M SAAR

SANTA MONICA, Calif. — This month’s new-vehicle sales (including fleet sales) are expected to be 1,080,200 units, a 17.9 percent increase from May 2009 and a 10.8 percent increase from April 2010, according to Edmunds.com.

Edmunds.com analysts predict that May’s seasonally adjusted annualized rate (SAAR) will be 11.4 million, up from 11.2 in April 2010.

May 2010 had 26 selling days, the same as May 2009. The following chart sets forth comparisons for the principal manufacturers between the current month, last month and May 2009.

  Change from May 2009 Change from April 2010
Chrysler 27.7% 5.2%
Ford 22.4% 16.7%
GM 11.7% 15.8%
Honda 22.2% 3.4%
Hyundai 27.5% 8.5%
Nissan 11.3% 17.9%
Toyota 7.5% 4.6%
Industry Total 17.9% 10.8%

“This month hasn’t been particularly good for the car business so far, but we anticipate that the holiday weekend will more than make up for it,” stated Jessica Caldwell, director of industry analysis for Edmunds.com. “In the last three years, Memorial Day weekend car sales averaged about 40 percent higher than the for non-holiday May weekends, and sales on the last day of May were about 130 percent more than the average sales day.”

The combined monthly U.S. market share for Chrysler, Ford and General Motors (GM) domestic nameplates is estimated to be 46.5 percent in May 2010, up from 46.3 percent in May 2009 and up from 45.3 percent in April 2010.

“It should be a great month for the industry, even though Chrysler and Toyota are continuing to pay for past mistakes and Honda is having trouble finding its way,” commented Edmunds.com Senior Analyst Michelle Krebs, who details Honda’s recent troubles in an AutoObserver.com report entitled “What’s Wrong at Honda? Maybe Everything.”

Edmunds.com predicts Chrysler will sell 100,500 units in May 2010, up 27.7 percent compared to May 2009 and up 5.2 percent from April 2010. This would result in a new car market share of 9.3 percent for Chrysler in May 2010, up from 8.6 percent in May 2009 but down from 9.8 percent as in April 2010.

Edmunds.com predicts Ford will sell 189,000 units in May 2010, up 22.4 percent compared to May 2009 and up 16.7 percent from April 2010. This would result in a new car market share of 17.5 percent of new car sales in May 2010 for Ford, up from 16.9 percent in May 2009 and up from 16.6 percent in April 2010.

Edmunds.com predicts GM will sell 212,800 units in May 2010, up 11.7 percent compared to May 2009 and up 15.8 percent from April 2010. GM’s market share is expected to be 19.7 percent of new vehicle sales in May 2010, down from 20.8 percent in May 2009 but up from 18.9 percent in April 2010.

Edmunds.com predicts Honda will sell 117,600 units in May 2010, up 22.2 percent from May 2009 and up 3.4 percent from April 2010. Honda’s market share is expected to be 10.9 percent in May 2010, up from 10.5 percent in May 2009 but down from 11.7 percent in April 2010.

Edmunds.com predicts Hyundai will sell 80,300 units in May 2010, up 27.5 percent from May 2009 and up 8.5 percent from April 2010. Hyundai’s market share is expected to be 7.4 percent in May 2010, up from 6.9 percent in May 2009 but down from 7.6 percent in April 2010.

Edmunds.com predicts Nissan will sell 75,100 units in May 2010, up 11.3 percent from May 2009 and up 17.9 percent from April 2010. Nissan’s market share is expected to be 7.0 percent in May 2010, down from 7.4 percent in May 2009 but up from 6.5 percent in April 2010.

Edmunds.com predicts Toyota will sell 163,900 units in May 2010, up 7.5 percent from May 2009 and up 4.6 percent from April 2010. Toyota’s market share is expected to be 15.2 percent in May 2010, down from 16.6 percent in May 2009 and down from 16.1 percent in April 2010.

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