By David Silver
All eyes are moving back to the auto industry tomorrow with the release of the monthly sales figures, and there will be many theories about the problems in Japan following the earthquake and tsunami - and possible ramifications on North American automakers. General Motors (GM) has reduced the amount of incentives it is offering, after coming out strong in the first two months of the year. When automakers offer high incentives, it has the effect of pulling sales forward from future months. Gasoline prices are the highest they have been since September 2008, which is improving sales for the smaller vehicles while sales of SUVs and light trucks are suffering.
Toyota (TM) estimates it lost approximately 140,000 units of production, with Honda (HMC) losing 46,000, and Nissan (NSANY.PK) missing out on 42,000 units; however, this lost production should have little to no effect on sales during March. The effect, if it is seen in the U.S. market, will come during the middle of April, when the parts inventory is exhausted. Even then, I do not expect it to be that dramatic. True, there may be a shortage of some aftermarket parts (production is expected to begin in the coming weeks), and there may not be every option available for the Toyota Prius, but most of the vehicles driven in North America are produced in North America, as are the parts. Only one General Motors plant has been shuddered because of the earthquake, in Shreveport, LA. A plant in Buffalo, N.Y., had to temporarily let go of some workers, but that was because it was a parts facility that built specifically for the truck plant down in Louisiana.
I am looking for sales to be up year over year (slightly), but to be down compared with the 13.4 million vehicles sold during February. This would mark the first month-to-month decrease in the seasonally adjusted annual rate of sales (SAAR) in the past seven months. Additionally, the top spot in the U.S. will be a close battle between Ford (F) and GM during the quarter. I expect GM to still hold onto the top spot, but not by much.