Ford, Nissan Top Estimates as Weather Boosts Auto Sales
General Motors Co. (GM), Ford Motor Co. (F), Toyota Motor Corp. (7203), Nissan Motor Co. and Chrysler Group LLC topped analysts’ estimates for March car sales as an end to two months of blizzards brought buyers back to showrooms.
U.S. auto sales rose 5.7 percent to 1.54 million cars and light trucks, according to researcher Autodata Corp. The annual sales rate, adjusted for seasonal factors, rose to 16.4 million from 15.3 million a year ago. That beat analysts’ projections for a 15.8 million pace on 1.48 million light vehicles sold.
The better-than-estimated results come as welcome relief to automakers that endured two months of quiet dealerships as blizzards and frigid temperatures kept tire-kickers homebound. Light-vehicle sales through February fell 1.4 percent, according to Autodata.
“Things are recovering to where we were last summer,” Matthew Stover, an analyst at Guggenheim Securities in Boston, said in a telephone interview. “The weakness we saw in January and February had more to do with weather than with the overall economy.”
Dealers began noticing more traffic on their lots in the second half of March, as the weather finally broke and snow began melting in many heavily populated regions of the country, executives said.
“It was encouraging to all of us -- after a softer January, February -- the spring market kind of bloomed in March,” John Felice, Ford’s U.S. sales chief, said today on a conference call with analysts and reporters. There were “encouraging signs coming out of March,” that “bode well” for this quarter.
April could be a strong month for auto sales because there is good credit available, plenty of inventory on dealer lots and growing cash incentives from automakers, said Mark Wakefield, a partner at consultant AlixPartners in Southfield, Michigan.
“This is the opposite of a perfect storm -- it’s a perfect calm,” said Wakefield, whose firm advised GM through its 2009 bankruptcy. “Most Aprils don’t have blizzards and sub-zero temperatures. So with these positive conditions and meaningfully increased incentives, the sales market looks good.”
GM showed no adverse effects from the recall of 2.6 million small cars tied to 13 deaths. GM sales rose 4.1 percent, after analysts predicted a 0.8 percent rise.
GM no longer makes Chevrolet Cobalt, Saturn Ion and other small cars that are the subject of the recall. The Detroit-based company’s current small car models, the Chevy Sonic, Spark and Cruze, reported sales increases of 14 percent to 46 percent.
“This has certainly been a trying month for GM, but you wouldn’t know it by looking at its sales,” said Jessica Caldwell, a senior analyst for auto researcher Edmunds.com “Nothing in our data shows that shoppers are shying away from new GM vehicles -- at least for now.”
Among large automakers, only Honda Motor Co. failed to beat analysts’ predictions. Honda sales fell 2 percent last month, compared with the 1.8 decline that was the average of seven analysts’ estimates.
Honda Accord sales fell 7 percent to 33,962, dropping to third place for the month in the mid-size sedan market behind the Toyota Camry, which had 41,953 deliveries, and the Nissan (7201) Altima, with 35,921 sales. Ford said it sold a record 32,963 Fusion sedans, up 8.8 percent.
Ford’s total light-vehicle deliveries rose 3.3 percent to 243,417. F-Series pickups gained 5.1 percent to 70,940, while Escape SUV sales slipped 0.8 percent to 28,701, the Dearborn, Michigan-based automaker said in a statement. The second-largest U.S. automaker topped the average of nine analysts who projected a gain of 1.1 percent.
Toyota deliveries rose 4.9 percent to 215,348 cars and light trucks, the company said in a statement. Nissan sales jumped 8.3 percent to 149,136 vehicles, a monthly record, according to a company statement. That beat projections of a 1.3 percent gain for Toyota and unchanged sales for Nissan, the averages of seven analyst estimates.
“Solid March sales pushed first-quarter industry results ahead of last year’s pace despite one of the harshest winters on record,” Bill Fay, group vice president of the Toyota division, said in a statement. “Toyota dealers had their two best sales weekends of the year late in the month, and we’re optimistic that momentum will spring us into April.”
Automakers should temper their optimism in this slow growth economy, Stover said. Employment and income growth remains “sluggish,” which weighs on auto sales, he said.
“The good news about these sales is that it says the weakness that we saw in the first two months was really more cosmetic than economic,” Stover said. “But we still are trying to answer the question of whether or not things are actually getting better.”
Hyundai Motor Co. and affiliate Kia Motors Corp., South Korea’s two biggest automakers, sold a combined 121,782 vehicles last month, a 3.7 percent increase. The average of seven analysts’ estimates was for a drop of 2.6 percent. Hyundai, based in Seoul, reported a 1.9 percent decline in sales to 67,005, while Kia said its deliveries grew 12 percent to 54,777.
Chrysler deliveries rose 13 percent to 193,915 for a 48th straight monthly gain, the Auburn Hills, Michigan-based company said today in a statement. The third-largest U.S. automaker beat the average of eight analysts, who projected an expansion of 10 percent. Ram pickup sales rose 26 percent to 42,532, Fiat sales gained 24 percent to 4,738 and Chrysler’s Jeep brand increased 47 percent.
The U.S. automaker owned by Turin, Italy-based Fiat SpA (F) finished the month with 71 days supply of inventory, down from 85 days at the end of February.
“We are entering the spring selling season on a high note as our Jeep and Fiat brands recorded their best sales months ever and Chrysler Group extended its streak in March to 48 consecutive months of year-over-year sales increases” Reid Bigland, the company’s U.S. sales chief, said in the statement.
Nissan reported record sales of crossover utility vehicles, such as the Rogue small SUV, which posted record monthly deliveries of 19,420.
“Crossovers are booming, with sales of Nissan crossovers up more than 25 percent so far in 2014,” Fred Diaz, Nissan’s U.S. marketing chief, said in a statement.
Combined sales of Volkswagen AG’s VW and Audi brands was little changed at 50,963. VW brand sales fell 2.6 percent while Audi sales rose 7.5 percent, the company said. While its Jetta sedan deliveries rose 6.3 percent to 13,687, sales of its Tiguan small SUV plunged 30 percent to 2,315.
GM’s results, originally scheduled to be released at 9:30 a.m. New York time, were delayed until 3 p.m. because of a computer system issue, the company said in a statement.
The automaker has announced almost 7 million recalls worldwide already this year, including the 2014 Chevrolet Silverado and GMC Sierra pickups equipped with 6-speed transmissions.
There is no vehicle type more important to the Detroit Three’s margins than pickups. They generate $8,000 to $10,000 in gross profits per vehicle and still produce most of the companies’ automotive income, according to Morgan Stanley. No longer just rugged roustabouts, today’s trucks can have as much leather and high-tech gear as a luxury car, with prices to match.
Last month, Chrysler offered an average incentive of $5,598 per truck on the Ram 1500, 35 percent more than the Ford F-150 and 46 percent more than Silverado, according to data dealers provide to researcher J.D. Power and Associates obtained by Bloomberg News. GM is holding off on incentives to preserve profit margins on its redesigned pickups.
This newfound discipline after years of matching foes’ offers or leading the way in discounting may give GM investors reassurance that the automaker has learned important lessons of its 2009 bankruptcy. GM’s gross margins in the first quarter may increase more than 20 percent while Ford’s may fall by almost 18 percent, according to analyst estimates compiled by Bloomberg.
The restraint isn’t without disadvantages for GM. In the tussle for lucrative and loyal truck buyers, Chrysler’s Ram boosted sales by 24 percent this year through February, while Ford’s F-Series is up just 1.1 percent and the Chevy Silverado has fallen 15 percent.
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