U.S. Auto Sales May Stall in August as Confidence Slumped

U.S. auto sales failed to rebound in August as confidence sank and prospects dimmed for faster economic growth, prompting at least a dozen analysts to lower estimates for light-vehicle deliveries for this year and next.

August vehicle sales, to be released tomorrow, may have run at a 12.1 million seasonally adjusted annual rate, the average estimate of 14 analysts surveyed by Bloomberg. The pace averaged 12.5 million in the first half before slowing to 12.2 million in July. The August 2010 sales rate was 11.5 million, according to Autodata Corp.

Tempered projections for output and job gains led analysts surveyed by Bloomberg to trim an average of 900,000 car and light truck sales from their estimates for this year and 2012. The U.S. economy may grow by less than 3 percent through 2013, helping keep the unemployment rate above 8 percent during that span, according to the Congressional Budget Office.

“We’re going to grow and things are going to continue to get better, but at even a much slower pace” than before, said Jeff Schuster, executive director of global forecasting at J.D. Power & Associates, which lowered its U.S. auto sales estimates by 300,000 cars and trucks for 2011 and by 600,000 next year.

Toyota Motor Corp. (7203), 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 March’s tsunami and earthquake that disrupted production.

Sales may decline 25 percent at Tokyo-based Honda Motor Co., the average of four analysts’ estimates. That would be the fourth straight month where sales slid 20 percent or more. General Motors Co. (GM) and Ford Motor Co. (F), the largest U.S. automakers, may report increases of at least 15 percent.

Annual Estimates

Concerns about the economy and financial markets are further delaying purchases put off during the recession and early recovery, said Schuster, who is based in Troy, Michigan. He is among the 12 analysts surveyed by Bloomberg who have cut their full-year auto-sales estimates since the first quarter.

Deliveries may rise to 12.7 million cars and light trucks this year, the average of 18 analysts’ estimates. The average estimate in April was for 2011 sales of 13 million light vehicles.

Industrywide deliveries 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.

Confidence Sinks

Confidence among U.S. consumers plunged in August to the lowest level in more than two years, the New York-based Conference Board said yesterday. The group’s index slumped to 44.5, the weakest since April 2009. Gross domestic product climbed at a 1 percent annual rate in the second quarter, less than previously estimated, the Commerce Department said Aug. 26.

GM is unsure of its forecast for at least 13 million industrywide vehicle sales, Chief Executive Officer Dan Akerson said at an Aug. 9 analyst meeting. That forecast includes medium- and heavy-duty trucks. August deliveries by the Detroit- based automaker may have climbed 17 percent, the average estimate of seven analysts.

Ford, which said last week it plans to collaborate with Toyota City, Japan-based Toyota on developing hybrid pickups and sport-utility vehicles, may report a 15 percent increase, the average of seven estimates.

Nissan Motor Co., whose better supply of parts has buoyed inventory levels above its Japan-based rivals, may say deliveries climbed 18 percent, the average of four analysts’ estimates.

Japanese Inventory

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.

“We believe Nissan is using that availability to drive aggressive sales promotions,” Brian Johnson, a New York-based analyst at Barclays Capital, wrote in an Aug. 25 report.

Chrysler Group LLC, the automaker majority owned by Fiat SpA (F), may say sales increased 16 percent, the average of six estimates. The Auburn Hills, Michigan-based automaker ran a no payments for 90 days promotion for some buyers of 2011 and 2012 Chrysler, Jeep, Dodge and Ram models during the month.

Vehicle prices may ease late in the year as competitors such as Toyota and Honda boost inventory, said Lacey Plache, chief economist at Edmunds.com, an auto-market researcher that has kept its estimates for auto sales at 12.9 million light vehicles this year and 13.9 million for 2012.

Production Returns

“Regardless of what’s happening in the overall economy, production is coming back,” said Plache, who is based in Santa Monica, California. “This will bring some of these sales which have been deferred back into the market.”

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 today for the August annualized sales rate by about 200,000 light vehicles to 11.9 million, citing weak confidence and inclement weather.

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

“Dealers had a couple days to get the customers on the phone and find a way to complete deals,” he said in a phone interview.

The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from August 2010, unadjusted for the difference in selling days. Forecasts for the seasonally adjusted annual rate, or SAAR, are in millions of light vehicles.

August had 26 selling days, one more than a year earlier.


                              GM     Ford   Chrysler   SAAR

Himanshu Patel                NA      NA       NA      12.1
(JPMorgan)
Rod Lache                     NA      NA       NA      12.2
(Deutsche Bank)
Chris Ceraso                  20%     18%      12%     12.1
(Credit Suisse)
Brian Johnson                 15%     14%      15%     12.1
(Barclays)
Peter Nesvold                 19%     16%      NA      12.3
(Jefferies)
Patrick Archambault           11%     14%      10%     12.0
(Goldman Sachs)
Itay Michaeli                 NA      NA       NA      11.9
(Citigroup)
Adam Jonas                    NA      NA       NA      11.9
(Morgan Stanley)
George Magliano               NA      NA       NA      12.2
(IHS Automotive)
Jeff Schuster                 NA      NA       NA      11.9
(J.D. Power)
Jessica Caldwell              20%     14%      21%     12.3
(Edmunds.com)
Jesse Toprak                  20%     12%      22%     12.2
(TrueCar.com)
Alan Baum                     NA      NA       NA      12.2
(Baum & Associates)
Seth Weber                    15%     14%      13%     12.1
(RBC)

Average                       17%     15%      16%     12.1


     The following table shows selling-day adjusted estimates
for company car and light-truck sales as a percentage change
from August 2010.

                              GM     Ford   Chrysler

Rod Lache                     14%     8.2%    19%
(Deutsche Bank)
Chris Ceraso                  16%     13%      8%
(Credit Suisse)
Brian Johnson                 11%     9.3%     10%
(Barclays)
Peter Nesvold                 14%     12%      NA
(Jefferies)
Patrick Archambault           7.1%    9.4%    5.7%
(Goldman Sachs)
Seth Weber                    11%     10%      9%
(RBC)


Average                       12%      10%     10%

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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