June Auto Sales Disappoint

Here are June sales for the major manufacturers in the U.S.:

Ford (F) -11%

GM (GMGMQ.PK) -33%

Chrysler -42%

Toyota (TM) -36%

Honda (HMC) -30%

Nissan (NSANY) -23%

Those numbers are all June 2009 over June 2008.

There had been some hope that industry sales would hit an annual rate of 10 million. The rate in May was 9.9 million. I haven’t seen it confirmed in print but CNBC announced that the annual rate was 9.6 million. If that’s correct, it represents a big disappointment.

Like other sectors, if you look real close, squint your eyes and click your heels toghether three times, you can visualize recovery. It just takes some imagination.

Comments

[sethmcs:]

Actually Ford's sales are impressive in the current environment. Toyota, Honda, Nissan are going to struggle with the strong Yen. GM and Chrysler will struggle with the government. Ford will eat their lunch. Long Ford. One other interesting note Ford has 3 billion gain to book on debt swap. I wonder if they will post a profit in the 2nd Quarter?

Jul 02 10:34 AM

[Tdot:]

Based on Ford's June sales "positive momentum", and if the rest of the US annualized auto industry average had been similarly down "only" 11%, then a rough calculation would indicate annual sales in or around the 12 million range. This is probably why Ford had predicted possibly breaking through the 10 million annual US rate, as discussed shortly before the July 1 actual sales figures releases, which were actually very close (9.6 to 9.9 million depending on who you ask).

In any case, the general public is reasonably aware of the coming Cash for Clunkers program in the US. Those that have qualifying older used vehicles that have substantially lower trade-in or negotiating value than what the Feds are offering would have to be stupid to "trade it in" now for a new car. They will, by and large, wait for the program to start, probably later in the summer/fall. One can anticipate that THAT is when a significant up-tick in sales will occur industry wide. If and when GM emerges from bankruptcy, and more or less intact with "no (apparent) harm done", then GM sales should also start to pick back up as well, and with GM, then the rest of the industry.

Another anticipated phenomenon might be with Dealers who see some of the "Clunkers" being brought in (for destruction) as still having some retail value above and beyond the maximum Fed allowances. Those dealers might well "bid higher" than the Fed on those trade-in values. There is still a very high demand out there for "cheap" but decent-condition used cars, particularly for those folks who have lost jobs, or are under mortgage or credit pressure, or are otherwise just cutting back.

That still leaves hoards - millions - of lease customers who have cars, trucks, and SUVs at or approaching the end of their current lease plans. Some may extend the leases another year, or buy the vehicle outright from the bank/dealer after some haggling, but there are still millions of good vehicles that are only 2-3 years old, on lease, that are expected to be returned as trade, and outside of any Cash for Clunkers program.

Everything points to steadily increasing auto sales in the second half, with perhaps a temporary leap above that trend as "Cash for Clunkers" kicks in, peaks, and then dissipating back to trend or level-off when the $1B allocation is gone, (probably long before the November 1 deadline), in anticipation of a possible extension of the program into early 2010.

Another factor to consider is the "usual" summer lull in auto sales, in anticipation of arrival of the full line of 2010 models - typically around Labor Day, with a significant leap in autumn sales. Historically, the automakers cut back substantially on production in July-August, temporarily shutting down some plants while changing over to producing the new model year, and reducing dealership lot inventories. Usually there are big incentives offered during this time frame. Many folks may be waiting for that annual ritual to get back into full swing.

Jul 02 12:32 PM

[a. palmer jr.:]

Actually, reduced sales in big ticket items can be seen as a good sign. It shows that Americans are finally starting to realize that we are in deep financial trouble and we are starting to save our money for something that we might need more, like food and housing. A new car can wait until we can actually afford it, which may be ten years away!

Jul 04 12:26 AM