U.S. Auto Sales in September May Be Best Since March

U.S. automobile sales in September may have run at the fastest pace since March as consumers returned to showrooms, helping the industry’s recovery from the worst year in almost three decades.

Industrywide deliveries, to be released tomorrow, may have reached an annual rate of 11.7 million vehicles this month, the average of nine analysts’ estimates compiled by Bloomberg. That would top the 9.4 million pace of last September, the month after the U.S. “cash for clunkers” program ended, and match March’s 11.7 million rate, according to Autodata Corp.

Consumers are slowly returning to dealers’ showrooms while remaining concerned about the security of their jobs, said Paul Ballew, chief economist for Nationwide Mutual Insurance Co. in Columbus, Ohio. Deliveries for all of last year fell to 10.4 million, the lowest since 1982, compared with the average 16.8 million vehicles a year from 2000 to 2007.

“It confirms to us that the recovery has gained a little bit of momentum in the third quarter and is somewhat back on track, but it is still a very slow recovery,” Ballew, a former General Motors Corp. economist, said in a telephone interview.

The Conference Board reported on Sept. 28 that consumer sentiment this month declined to the weakest level since February. The U.S. unemployment rate was 9.6 percent in August, up from 9.5 percent in July.

The U.S. auto selling rate has stayed above 11 million since March, according to Autodata, a research firm based in Woodcliff Lake, New Jersey.

Replacing Vehicles

Chrysler Group LLC, based in Auburn Hills, Michigan, may have led U.S. automakers with a 48 percent sales increase, the average of six analysts’ estimates, helped by higher deliveries to fleet customers.

Ford Motor Co. (F) may post a 40 percent sales increase, the average of six analysts’ estimates.

Deliveries by Detroit-based General Motors Co. (GM) will rise 13 percent, the average of three estimates. GM’s market share will fall to 18 percent, one of its lowest levels since World War II, according to TrueCar.com, an automotive pricing website based in Santa Monica, California. Edmunds.com, also based in Santa Monica, expects GM to hold 18.3 percent of the market.

“GM has some hot new models, but also some older vehicles that they need to replace or get rid of,” said Ivan Drury, an Edmunds analyst.

Consumers are buying new cars and trucks largely because they must replace vehicles that have come off lease or broken down, said Jeff Schuster, executive director of forecasting at J.D. Power & Associates in Troy, Michigan.

‘Taking Cover’

“The consumer is still taking cover and still a little confused by how to read all of the variables out there,” Schuster said in a telephone interview. “Confidence is still skittish with the consumer and I think it’s something that’s going to take a little bit longer to come back, even once we look at an economy that’s actually growing again.”

The worst recession since the 1930s ended in June 2009, the National Bureau of Economic Research’s Business Cycle Dating Committee said Sept. 20.

The U.S. economy grew at a 1.7 percent annual rate in the second quarter, according to the Commerce Department’s revised figure today. That’s down from 3.7 percent during the first three months of the year and 5 percent at the end of 2009.

Retail Gains

Sales to individual consumers, as opposed to fleet buyers such as rental-car companies, may rise to a 9.5 million pace, the average of four analysts’ estimates.

That would be the first time since mid-2008 that the retail rate exceeded 9 million vehicles for three straight months, Chris Ceraso, a Credit Suisse AG analyst, said in a Sept. 28 note.

Fleet sales will account for 19 percent of deliveries, up from 16 percent in August, Ceraso said.

Small businesses and fleet customers may have contributed to higher truck sales, said Joe Barker, senior manager of North American vehicle sales forecasts at IHS Automotive, a Lexington, Massachusetts-based researcher.

“They put a lot of miles on them every year and they beat them up every year and it’s time to replace them,” said Barker, who is based in Northville, Michigan.

Tight credit for some consumers restrained deliveries, with buyers who missed mortgage payments being denied or asked to prepay as much as 30 percent of the sticker price, said Jesse Toprak, vice president of industry trends for TrueCar.

“Banks have placed limits on who they will accept,” said Frank Ursomarso, a GMC-Buick and Honda dealer in Wilmington, Delaware. “They used to offer tougher terms on loans. Now they just say no.”

Incentives Trimmed

Automakers decreased sales incentives and discounts by an average of 2 percent from last year, which may have kept sales from gaining more, according to TrueCar.

Ford, based in Dearborn, Michigan, was the only U.S. automaker to raise incentive spending, TrueCar said. Ford’s average discounts rose 7.4 percent from last year to $2,797 per vehicle, while Chrysler decreased incentive spending by 23 percent to $3,787 and GM cut them by 11 percent to $3,403.

Honda Motor Co.’s sales growth may have outpaced its Japanese rivals. The automaker’s deliveries may have risen 32 percent, according to four analysts’ estimates.

Nissan Motor Co.’s sales may have climbed 30 percent and Toyota Motor Corp. (7203)’s may have increased 21 percent, according to four estimates.

Honda’s incentive spending rose 68 percent to an average of $2,166, according to TrueCar. Toyota boosted discounts by 38 percent to $1,870, and Nissan increased them 10 percent to $2,980.

The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from September 2009. Forecasts for the seasonally adjusted annual rate, or SAAR, are in millions of vehicles.

September had 25 selling days, the same as a year earlier.


                              GM     Ford   Chrysler  SAAR

Himanshu Patel                NA      NA        NA    11.9
(J.P. Morgan)
Rod Lache                     NA      40%       45%   11.6
(Deutsche Bank)
Jesse Toprak                  10%     42%       48%   11.6
(TrueCar.com)
Joseph Barker                 NA      NA        NA    11.6
(IHS Automotive)
Jessica Caldwell              11%     38%       52%   11.5
(Edmunds.com)
Jeff Schuster                 NA      NA        NA    11.8
(J.D. Power)
Brian Johnson                 NA      38%       43%   11.7
(Barclays Capital)
Christopher Ceraso            18%     43%       48%   11.7
(Credit Suisse)
Patrick Archambault           NA      39%       51%   11.7
(Goldman Sachs)

Average                       13%     40%       48%   11.7

To contact the reporters on this story: Tim Higgins at thiggins21@bloomberg.net; David Welch in Southfield, Michigan, at Dwelch12@bloomberg.net.

To contact the editor responsible for this story: Kevin Orland at korland@bloomberg.net.

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