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Is The Glass Half Full or Half Empty By: David Silver

|Includes:DDAIF, Ford Motor Company (F), HMC, TM, VLKAY
As we approach the end yet another month (by the way, 2010 seems to be flying by, it is about to be October!), auto sales releases are just around the corner. From some of the dealerships I speak with around the country, the month has been “one of those months.” When I asked about what type of sales they were seeing compared to the same time last year, dealerships were positive, bragging that even despite the cash for clunkers program, they are still seeing higher sales. However, when I bring up the last few months, their mood takes on a much more somber tone. Since topping out in April and May of this year, auto sales have been trending down as the strength of the economic recovery was questioned and the fear that another wave of job losses would afflict the country increased. 
 
On the bright side, dealerships haven’t been offering more incentives to get more customers in the door, which bodes well for the financial durability of both the automakers and the dealerships. According to Edmunds.com, the average manufacturer incentives are estimated at $2,595 for each vehicle sold in September, down $106, or 3.9%, from last month, and off $151, or 5.5%, from September 2009. The headlines this morning are taking the positive approach, that despite seeing growth rates continue to fall, auto sales are expected to have reached the highest level since March (only May had more sales) with more than 11.7 million vehicles sold.
 
The weakness in the economy has pressured sales over the past few months, and all indications are that that weakness will continue. The following table outlines our expectations for the month of September compared to both September 2009 as well as August 2010. We are expecting the month to bounce back from the previous year; however, we are expecting that total sales during the month of September will be lower than that of August 2010.  
 
Company
Expectations
Y/Y Change
M/M Change
General Motors
180,923
16.2%
(2.3%)
Ford Motor Company
154,468
35.2%
(1.9%)
Toyota Motor Company
147,717
17.2%
(0.5%)
Chrysler
83,406
34.1%
(16.3%)
Daimler
19,245
8.1%
(2.2%)
Volkswagen
19,825
14.2%
(13.3%)
Nissan Motor Company
71,022
28.2%
(7.6%)
Honda Motor Company
93,611
21.2%
(13.9%)
Hyundai
41,346
31.2%
0.3%
 
The industry is far from healed, but the companies seem happy with the current growth rates, especially considering the difficult comparisons that they will be cycling for the next few months.
 
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Disclosure: F Long
Stocks: F, TM, VLKAY, DDAIF, HMC