GM, Chrysler Lead Auto Sales Gains Tempered By Supply Shortages

Thursday, 01 September 2011 02:08 PM

Sept. 1 (Bloomberg) -- General Motors Co. and Chrysler Group LLC beat analysts’ estimates for U.S. sales increases in August as shortages of smaller cars tempered industry gains.

GM deliveries rose 18 percent to 218,479 cars and light trucks, Detroit-based GM said today in an e-mailed statement. Chrysler sales surged 31 percent and Nissan Motor Co. deliveries climbed 19 percent, both beating estimates.

U.S. vehicle sales may have run at a 12.1 million seasonally adjusted annual rate in August, the average estimate of 14 analysts surveyed by Bloomberg. Shortages of cars such as Ford Motor Co.’s Focus and inventory constraints for Toyota Motor Corp. and Honda Motor Co. limited gains from the industry’s 11.5 million sales pace a year earlier.

“I wouldn’t say anyone is jumping up and down about these numbers because they are just meeting our more moderate expectations,” Rebecca Lindland, an analyst with consultant IHS Automotive in Lexington, Massachusetts, said in a phone interview. “This is the third year of auto sales not being up where the U.S. market should be, but the economy is just not letting us get there.”

The pace of U.S. auto sales averaged 12.5 million light vehicles in the first half before slowing to 12.2 million in July. The U.S. averaged annual sales of 16.8 million vehicles from 2000 to 2007, according to Autodata Corp.

GM’s Cruze benefited from lingering shortages of small cars such as Toyota’s Corolla and Honda’s Civic after the March tsunami and earthquake in Japan disrupted production. GM and Ford said sales of their Cruze and Focus compacts could have been higher with more inventory.

Tight Supply

Cruze ended August with 33 days supply, said Don Johnson, vice president of U.S. sales, less than the industry standard of about 60 days.

GM’s sales increase beat the 17 percent average estimate of seven analysts surveyed by Bloomberg. Chrysler topped six analysts’ average estimate for a 16 percent rise, and Nissan exceeded four analysts’ average estimate of 18 percent.

Ford, based in Dearborn, Michigan, reported an 11 percent increase in light-vehicle sales, less than the average of seven estimates for a 15 percent gain. Deliveries of the Focus dropped 8.9 percent and were “constrained by low inventory,” according to a statement.

Sinking consumer confidence and tempered projections for economic growth has prompted at least a dozen analysts to lower estimates for light-vehicle deliveries for this year and next.

Confidence among U.S. consumers plunged in August to the lowest level in more than two years, the New York-based Conference Board said Aug. 30. The U.S. economy may grow by less than 3 percent through 2013, helping keep the unemployment rate above 8 percent during that span, the Congressional Budget Office said in an Aug. 24 report.

Sales Stabilizing

“Even though the economy isn’t improving at the kind of pace most of us would like to see, we’re at least at a point where there’s enough certainty with where we’re at that vehicle sales have stabilized,” Alec Gutierrez, analyst for Kelley Blue Book, an automotive research firm in Irvine, California, said in a phone interview.

Toyota, Asia’s largest automaker, may report an 11 percent decline in deliveries, the average estimate of four analysts surveyed by Bloomberg. That would be the fourth consecutive monthly decline of 10 percent or more following production disruptions related to the tsunami and earthquake. Hyundai Motor Co. and its affiliate, Kia Motors Corp., are scheduled to report August sales later today.

Sales for Tokyo-based Honda declined 24 percent, the company said on its website. The average of four analysts’ estimates was for a 25 percent drop. It was the fourth straight month where sales slid 20 percent or more.

Cruze Sales

GM’s Cruze deliveries climbed to 21,807, almost four times the year-earlier sales of the Cobalt compact that the Cruze replaced late last year and the fifth-straight month of more than 20,000.

“GM has been on a bit of a roll,” Jeremy Anwyl, chief executive officer of auto researcher Edmunds.com in Santa Monica, California, said in a telephone interview. “The inventory shortage at Toyota and Honda has created an opportunity for everybody and they’re not letting it slip by.”

GM fell 71 cents to $23.32 at 12:44 p.m. in New York Stock Exchange composite trading. The shares dropped as much as 2.3 percent before the company announced sales. Ford shares were unchanged at $11.12, down 34 percent this year.

Industrywide light-vehicle deliveries may rise to 12.7 million cars and light trucks this year, the average of 18 analysts’ estimates in a Bloomberg survey. The average estimate in April was for 2011 sales of 13 million light vehicles.

Sales Outlook

Sales may climb to 13.6 million in 2012, the average of 15 estimates in a Bloomberg survey. Of the analysts surveyed, 13 have reduced their estimates from earlier this year. The U.S. averaged annual sales of 16.8 million vehicles from 2000 to 2007, according to Woodcliff Lake, New Jersey-based Autodata.

Nissan, based in Yokohama, began the month with 54 days supply of cars and trucks, according to Himanshu Patel, a JPMorgan Chase & Co. analyst. Toyota had 34 days supply of vehicles, while Honda had 27, Patel said in an Aug. 29 report.

“They have been able to rectify the inventory shortage faster than Toyota or Honda,” Edmunds.com’s Anwyl said. “And they have been very aggressive.”

Nissan used the better availability to drive “aggressive sales promotions,” Brian Johnson, a New York-based analyst at Barclays Capital, wrote in an Aug. 25 report. Nissan brand sales rose 22 percent to 82,517, Katherine Zachary, a spokeswoman, said in a phone interview. Deliveries of its Infiniti luxury brand fell 4.3 percent to 9,024.

Chrysler Promotions

Chrysler, the Auburn Hills, Michigan-based automaker, majority owned by Fiat SpA, ran a no payments for 90 days promotion for some buyers of 2011 and 2012 Chrysler, Jeep, Dodge and Ram models during the month.

Grand Cherokee, Compass and Wrangler models propelled the Jeep brand to a 58 percent increase. Chrysler sold 130,119 vehicles in August compared with 99,611 a year ago.

Volkswagen AG’s namesake brand sales climbed 10 percent to 25,232, according to an e-mailed statement. Deliveries of its Jetta compact sedan surged 36 percent to 14,500. The brand is on target to reach 328,000 sales in the U.S., Frank Trivieri, vice president of sales, said on a conference call.

Hurricane Irene, which killed at least 40 people and ravaged the East Coast from North Carolina to Maine late in the month, interfered with auto deliveries in states that represent about 30 percent of the total U.S. sales, said Paul Taylor, chief economist at the National Automobile Dealers Association.

J.D. Power lowered its estimate yesterday for the August annualized sales rate by about 200,000 light vehicles to 11.9 million, citing weak confidence and the hurricane.

Some of the sales lost due to the storm may be deferred to September, Taylor, who is based in McLean, Virginia, said in an Aug. 29 phone interview.

--With assistance from David Welch and Keith Naughton in Southfield, Michigan, Tim Higgins in Singapore and Alan Ohnsman in Los Angeles. Editors: Bill Koenig, Jamie Butters

To contact the reporter on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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Sept. 1 (Bloomberg) -- General Motors Co. and Chrysler Group LLC beat analysts’ estimates for U.S. sales increases in August as shortages of smaller cars tempered industry gains. GM deliveries rose 18 percent to 218,479 cars and light trucks, Detroit-based GM said today in...
Thursday, 01 September 2011 02:08 PM
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