Hurricane Sandy's Impact On U.S. Auto Sales

Includes: F, GM, TM, VLKAF
by: Bidness Etc

Hurricane Sandy showed its impact this Thursday, when U.S. seasonally adjusted annual rate (SAAR) of sales turned out to be a disappointing 14.2 million only, way less than September's SAAR of 14.9 million and less than the 14.8 million mark projected by different auto experts, including Edmunds. Despite the natural disaster that hit the U.S. on Monday and ruined sales of Oct. 29, 30, and 31, the results for the auto industry for this month came out strong, according to Vice Chairman of Toyota Motors (NYSE:TM) Bob Carter.

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Sandy's Impact

All the automakers missed analysts' average estimates for October auto sales. The hurricane slammed the East Coast of the country at the busiest time of the month for the auto industry. According to Edmunds, the last seven days generated more than 30% of industry sales.

Analysts had predicted a year-over-year gain of 12%, to 1.15 million units. Sales of light vehicles for October increased by only 6.9%, to 1.09 million. However, Toyota's VC was not wrong in saying that the results were still strong when compared on a year-over-year basis. An Edmunds' researcher was reported to have said that "anybody who reads these numbers as 'the industry is softening' is incorrect." The following table shows the YoY performance of the different automakers:

Source: Qineqt's calculations.

Assessing the storm's effect is quite difficutl. Ford's (NYSE:F) Sales Head Ken Czubay claimed that the Sandy reduced October auto sales by 20,000-25,000 units and cut the October SAAR by around 0.3 million. Another expert, the vice president of, estimated that volume has been reduced by 32,000 units and SAAR by 0.4 million.

Most of the questions will be answered in next month's sales summary. Many dealers are optimistic that they will benefit from sales through owners swapping their damaged vehicles, and through those buyers who could not make it to the dealers' showrooms due to the flood. However, a large part of the market still thinks that the effect of the hurricane will also disturb the stats for November and, therefore, the results will not get better before December. In a press release yesterday, the Greater New York Auto Dealers' Association told CNBC that 60% of dealers in metro NYC and nine downstate counties are not operational right now.

The table above shows that two of the Detroit 3 (D3) manufacturers posted strong results. Especially Chrysler, whose double digit growth was only behind the gains posted by Toyota and Volkswagen (OTCPK:VLKAF). Volkswagen, which has not been included in the table due to its small market share, posted the largest gain of 22%.

Japanese manufacturers have been posting gains after their past year's performance was dented by the Tsunami in Japan and its after-effects. Nissan, the only exception in the group of Japanese automakers, was hit hard by the Sandy in the Northeast, where the company has 225 area dealers.

Talking in terms of continents, European manufacturers posted the largest year-over-year gain of 13%, followed by Asian companies with 8% and 4.2% by North American operators. The following also shows the current market shares of the major car manufacturers in North America and their year-over-year and month-over-month changes.

Source: Qineqt's calculations.

A Look at Ford

We covered Ford recently in detail after its latest earnings release. This paragraph will only cover the performance of the company's products in October. The company's F-series stood out again, being the top seller among the light trucks segment. The F-series led the market by a huge margin of almost 45%, in terms of sales, followed by GM's Silverado that attained the No. 2 spot. Overall, truck sales went down by 1.8% year over year. On the other hand, sales for utilities and cars went up by 1.9% each. In the cars category, the company's Focus recorded the most gain of 48%. Ford's October small car sales went up by 54%, being the strongest in any month since the last 11 years. This shows how consumer preferences are evolving over the period of time and the affect that the recession has had on this industry. Escape, among the utilities, showed strong performance by posting a 4% rise. Ford missed analyst expectations of a 3.2% rise in auto sales for this month, which can be attributed to Hurricane Sandy for the most part as it flooded Ford's key dealerships in New Jersey and New York. However, the company claims that most of these dealerships have been restored.

A Look at General Motors

General Motors (NYSE:GM) posted a strong gain of 5%. However, the company missed the analyst estimates of 7.8%. The company reported its highest sales figure since 2007. The sales of cars were up 15%, crossovers were up 3%, and trucks were up 8%. The company is conducting the largest product launch in its history. New designs of Chevrolet Spark, Buick Verano, and Cadillac ATS helped achieve higher car sales. Buick and Cadillac's categories achieved double-digit growth year over year.

Source: Qineqt's calculations.


The U.S. auto market is heading toward certain improvement. The truck ranges have benefited from the revival of the housing sector. October sales in no way reflect that the auto industry is weak, as the market knows that much of the damage has been caused by the natural disaster. Before forming any opinion, it will be necessary to see what stats the auto industry has to offer in November and December.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: The article has been written by Qineqt's Industrials Analyst. Qineqt is not receiving compensation for it (other than from Seeking Alpha). Qineqt has no business relationship with any company whose stock is mentioned in this article.