Auto sales are in for April, and they are looking to slow from the strong pace we have seen so far this year. Chrysler, Volkswagen (VLKAF.PK), and Mercedes led the way during the quarter as Chrysler was helped by up to $2,000 in rebates. Chrysler reported extremely strong first quarter earnings results and the strength appears to have continued. Toyota (TM) bounced back as well; gaining 8.9% compared to April of 2011, as inventories are finally back to the levels as before the earthquake, tsunami, and nuclear disaster last year.
The strength in Chrysler, Volkswagen, Mercedes, and Toyota came at the expense of the two largest automakers, with both General Motors (GM) and Ford (F) seeing sales decline compared to April of 2011. Ford's result comes as the Company is struggling with production shortages, whereas General Motors didn't offer nearly as many incentives as other automakers and saw their market share suffer as a result. Another reason for the slowdown in sales is due to the calendar. This April had more Sundays than April 2011, which accounted for three fewer selling days (many states force auto dealerships to be closed on Sunday). Sales started off the month slowly, but gained traction towards the end of the month. Perhaps the biggest surprise was the 0.8% increase in sales for Hyundai. During the first three months of the year, Hyundai saw 10.5% growth compared to 2011. Kia, which has also been a stalwart, increased only 1.0% during the month of April (sales had increased 22.3% year to date). Many automakers are reporting record April sales, or at least the best April in the past five years, however, the feeling is relatively muted.
The industry seasonally adjusted annual rate of sales (SAAR) improved to 14.4 million, year over year, but was relatively inline with the 14.42 million that was achieved during March. Seasonal adjustments benefited April more than March, but still there were pockets of strength. The first three months of the year were very strong, but April didn't really carry the baton. The following table outlines some of the automakers' monthly sales tally, as well as the year-over-year change, and the change year-to-date.
% Change Y/Y
% Change YTD
Sales of the battery-powered Chevrolet Volt fell 36% during April to 1,462 vehicles from March. GM halted production of the Volt in mid-March due to slow sales and resumed production a week earlier than planned last month. Ford's Fiesta subcompact declined 44% to 5,135 compared to March as hefty incentives on the Focus compact car, dug into sales of the smaller and less expensive Fiesta. Mercedes, BMW, and Audi reported strong months, but Lincoln, Buick, and Cadillac saw disappointing results. It was an interesting bifurcation as in previous months; luxury brands have trended in similar directions.
It was a good month again for auto sales for every company save General Motors and Ford. Chrysler continues to improve and impress, however, I would like to see the Company generate this type of sales without the high levels of incentives. Hyundai and Kia appeared almost human, while Volkswagen continued to be strong. Year to date, Volkswagen sales are up 37.8% year over year. Manufacturing was strong through the ISM manufacturing index on Wednesday morning, but future auto sales will be dependent on the jobs picture. Companies during earnings season have for the most part reported a very strong quarter, but employment has historically been a solid leading indicator for auto sales.
Disclosure: I am long F.