Best U.S. Auto Sales Streak Since ’08 Helped by Toyota
(Corrects Edmunds.com sales rate estimate in chart in story published Feb. 29.)
Tamara Darvish can tell the U.S. auto industry is back by looking out on the lot of one of her company’s four Toyota dealerships.
Darcars Automotive Group’s Toyota store in Frederick, Maryland, took delivery of 200 vehicles from the manufacturer this month, up from monthly allocations of as few as 80 last year, after Japan’s tsunami limited Toyota Motor Corp. (7203) and Honda Motor Co.’s production and depleted inventories. With supplies rebounding, industrywide sales accelerated in January to the best pace since the government’s “cash for clunkers” program in August 2009.
“February is looking just as good” as January, said Darvish, whose company’s 34 franchises also include Chrysler Group LLC, General Motors Co. and Kia Motors Corp. (000270) brands. “Availability is getting a lot better.”
Light-vehicle sales in February, set for release tomorrow, may have run at a 14.2 million seasonally adjusted annual rate, the average estimate of 17 analysts surveyed by Bloomberg. That pace would match January’s and be the first time the U.S. posted a 14 million rate in consecutive months since May 2008. The sales rate was 13.3 million in February 2011.
Six months ago, Darcars’s Toyota dealerships operated with enough vehicles on the lot to last 25 days, said Darvish, the group’s vice president. With supply at the Frederick lot now at a more-normal 65 days, the closely held group’s February sales will exceed those of August, a typical year’s best month, she said.
Consumers gained confidence in February as the Dow Jones Industrial Average exceeded 13,000 for the first time since May 2008 and the unemployment rate fell to the lowest in three years. The improving economy may have blunted the impact of rising gasoline prices. The average price for a gallon of regular unleaded has increased 13 percent this year to $3.72 (3AGSREG) as of Feb. 27, according to AAA, the largest U.S. motoring group.
Ford Motor Co. (F) sales may rise 9.4 percent, the average of 10 estimates. Pickups may constitute less than 11 percent of industrywide sales in February, down from more than 13 percent in December, said Erich Merkle, the automaker’s sales analyst. Ford has still increased the average sales price of its vehicles fleetwide by more than $1,000 from a year earlier, Merkle told reporters today in Dearborn, Michigan.
Chrysler, majority-owned by Fiat SpA (F), may have the biggest monthly sales increase among major automakers. Deliveries may rise 26 percent, the average of 10 estimates. Sergio Marchionne, chief executive officer of Fiat and Auburn Hills, Michigan-based Chrysler, said yesterday in an interview in Brussels that the company expects to “weather even a rising oil situation.”
“The domestic automakers are in the best position they’ve been in terms of their presence in the small-car segment,” Jesse Toprak, an analyst for the auto-pricing website TrueCar.com, said in a phone interview. “When gas prices rise, they’re not being pushed to the sideline to watch the Asian automakers enjoy the resurgence in demand for small cars.”
GM (GM), which regained global sales leadership last year, may sell 4.8 percent fewer vehicles this month compared with a year earlier, the average of 10 analysts’ estimates. Analysts said the Detroit-based automaker pared incentives from a year ago, when it outspent the industry average by 45 percent, according to Woodcliff Lake, New Jersey-based researcher Autodata Corp.
GM’s average spending on incentives per vehicle may have dropped by 19 percent in February from a year earlier, according to Santa Monica, California-based TrueCar. GM has said it is trying to increase its profit margins.
The U.S. automakers are counting on demand for new vehicles to keep improving as their inventories draw more concern from analysts, including Chris Ceraso at Credit Suisse. By the end of March, GM, Ford and Chrysler may have about 19 percent more car inventory than what Credit Suisse considers normal, Ceraso said in a research note dated Feb. 13.
“It looks like the Big 3 have failed to align their car production with actual demand in the market, which has decelerated as Japanese-brand car availability improved,” Ceraso wrote. Models with the most inventories on a days-supply basis in January included Ford’s Fiesta subcompact at 132 days, GM’s Chevrolet Malibu sedan at 109 and Chrysler’s 200 sedan at 80, according to Autodata.
Deliveries for Toyota City, Japan-based Toyota in February may have risen 8.2 percent, while Honda’s may have increased 4.5 percent, the average of seven analysts surveyed by Bloomberg. Honda reported a monthly sales increase for January that was its first since the Tokyo-based automaker’s inventory plunged following Japan’s earthquake and tsunami in March.
The Subaru brand of Fuji Heavy Industries Ltd. (7270), a Toyota affiliate, was the top automaker in annual rankings that Consumer Reports magazine released yesterday, with 75 of 100 points based on the scores of its seven U.S. models. Toyota was third-ranked automaker while having the most models the magazine recommends buying, with 22 out of 26 tested.
The higher inventory for U.S. automakers is likely to be soaked up by consumer demand rather than production cuts, said Jeff Schuster, senior vice president of forecasting at LMC Automotive. Vehicle inventory for the industry was 66 days supply at the beginning of February, from 52 days at the start of the year, according to the Troy-based researcher.
“We’re now looking at a replenished inventory level, so supply is starting to get to that stage of needing to be monitored more closely,” Schuster said in a phone interview. “It does beg for more active monitoring.”
Volkswagen AG (VOW3), which is targeting U.S. sales growth of more than 10 percent this year, may increase combined sales of its Volkswagen and Audi brand vehicles by 33 percent in February, the average of three estimates.
Nissan Motor Co. may increase sales 6.1 percent, the average of seven analysts’ estimates.
Affiliates Hyundai Motor Co. (005380) and Kia may combine to sell 19 percent more vehicles than a year earlier, the average of five analysts’ estimates.
The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from February 2011. Forecasts for the seasonally adjusted annualized rate, or SAAR, are in millions of light vehicles.
February had 25 selling days, one more than the year- earlier period.
GM Ford Chrysler SAAR Rod Lache -4% 8.7% 22% 14.1 (Deutsche Bank) Peter Nesvold -5.9% 13% 27% 14.2 (Jefferies) Patrick Archambault -2.6% 11% 26% 14.3 (Goldman Sachs) Joseph Spak -5.2% 8% 24% 14.1 (RBC) Brian Johnson -3.6% 7.1% 32% 14.3 (Barclays Capital) Emmanuel Rosner -3.9% 5.6% 25% 14.5 (CLSA) Itay Michaeli NA NA NA 14.2 (Citigroup) Adam Jonas NA NA NA 14.3 (Morgan Stanley) Himanshu Patel NA NA NA 14.2 (JPMorgan) Matthew Stover NA NA NA 14.3 (Guggenheim) George Magliano NA NA NA 13.8 (IHS Automotive) Jeff Schuster NA NA NA 14.0 (LMC Automotive) Jessica Caldwell -5.0% 18% 32% 14.4 (Edmunds.com) Jesse Toprak -6.1% 14% 27% 14.3 (TrueCar.com) Alan Baum NA NA NA 14.0 (Baum & Associates) Alec Gutierrez -5.8% 5.6% 25% 13.8 (Kelley Blue Book) Chris Ceraso -5.6% 3.4% 22% 14.1 (Credit Suisse) Average -4.8% 9.4% 26% 14.2 The following table shows selling-day adjusted estimates for company car and light-truck sales as a percentage change from February 2011. Rod Lache -7.8% 6.1% 18% (Deutsche Bank) Peter Nesvold -9.6% 8.1% 22% (Jefferies) Patrick Archambault -6.5% 7% 21% (Goldman Sachs) Joseph Spak -9% 4% 19% (RBC) Brian Johnson -7.5% 2.8% 27% (Barclays Capital) Emmanuel Rosner -7.4% 4.8% 22% (CLSA) Average -8.2% 4.4% 21%
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