U.S. Auto Sales Slow on Deferred Purchases, Toyota Inventory
July 02, 2011, 1:50 PM EDTBy Craig Trudell and Alan Ohnsman
July 2 (Bloomberg) -- U.S. auto sales in June ran at the slowest pace in 12 months, as small-car supply dwindled, Toyota Motor Corp.’s inventory thinned and consumers deferred purchases amid a slowing economic recovery.
General Motors Co. and Ford Motor Co. said U.S. sales rose 10 percent in June, missing the average estimate of seven analysts surveyed by Bloomberg. Toyota and Honda Motor Co. deliveries each fell 21 percent, more than analysts estimated. Nissan Motor Co. recorded an 11 percent gain, less than projected, while Chrysler Group LLC sales topped forecasts.
Industrywide light-vehicle sales slowed to an 11.5 million seasonally adjusted annual rate, trailing the 12 million average estimate of 12 analysts. Small-car purchases are being lost due to supply constraints hurting all automakers.
“What we thought was going to be a stable recovery was shattered by the Japanese problems in the first half,” Jesse Toprak, an analyst at TrueCar.com, said in a telephone interview. “These are fragile blocks we’re stepping on to get to more stable ground.”
Total light-vehicle sales rose 7.1 percent in June from a year earlier to 1.05 million, researcher Autodata Corp. said in an e-mailed statement. Japan’s March 11 earthquake, which cut production and vehicle inventories for Toyota and Honda, again contributed to a slower growth pace.
GM, Ford and Chrysler had combined market share of 50.1 percent last month, the first time the U.S.-based companies rose above 50 percent since August 2009, according to Autodata. Sales declines for Toyota and Honda cut market share for Asia-based carmakers’ to 39.9 percent from 44.8 percent a year ago, according to Woodcliff Lake, New Jersey-based Autodata.
Buyers ‘Sitting Out’
Deliveries of Chevrolet Silverado and Ford F-Series pickups rose less than those of fuel-efficient models such as the Cruze and Focus after gasoline above $3.50 a gallon led to shortages of cars like GM’s Aveo and Ford’s Fiesta. Toyota had only about a 1-day supply of Prius hybrids as of last week, said Bob Carter, group vice president of Toyota’s U.S. sales.
“A lot of full-size pickup buyers in particular, when there was volatility and uncertainty around fuel prices, were sitting out of the market,” Don Johnson, GM’s vice president of U.S. sales, said yesterday on a conference call. “We expect them to come back into the market as the economy slowly recovers.”
The unemployment rate rose to 9.1 percent in May. U.S. consumers’ confidence fell more than anticipated in June, the Thomson Reuters/University of Michigan final index showed yesterday. The percentage of consumers planning to buy a new vehicle within six months fell to 3.1 percent, the lowest since December, the New York-based Conference Board said this week.
U.S. auto sales will recover in the second half and annual deliveries will rise to 12.9 million vehicles, according to forecasters at Edmunds.com and J.D. Power & Associates.
Prius Stumbles
Toyota and Honda, having lost production after the 9.0- magnitude earthquake March 11 near Japan, were expected to report declines of 13 percent, the average of four analysts’ estimates surveyed by Bloomberg.
Toyota sold 110,937 Toyota, Lexus and Scion vehicles last month, down from 140,604 a year ago, including just 4,340 Prius hybrids. That was the lowest volume for the car since September 2004, according to Bloomberg data.
Nissan, Japan’s second-largest automaker, sold 71,941 Nissan and Infiniti brand vehicles last month, up from 64,570 a year ago, the company said in an e-mailed statement. Nissan’s 11 percent gain compares to a forecast of a 25 percent increase, the average of four analysts’ estimates.
Honda’s Slide
Honda’s deliveries dipped to 83,892 Honda and Acura vehicles from 106,627, as production of Civic small cars again ran at only about a 50 percent rate at North American plants. The Tokyo-based company doesn’t know yet how soon it can resume full production, said Chris Martin, a Honda spokesman.
Some consumers, hearing about tight vehicle supplies for the Japan-based brands, may have stayed away from dealer lots in June on concern prices would be higher than usual, Al Castignetti, Nissan’s vice president of U.S. sales, said in a phone interview yesterday.
“There may have been some concern about getting gouged on price,” Castignetti said.
Hyundai Motor Co., South Korea’s largest automaker, boosted sales 16 percent in June to 59,209, while affiliate Kia Motors Corp. said its U.S. deliveries jumped 41 percent to 45,044. The companies, which operate separately in the U.S., sold a combined 104,253 cars and light trucks last month, behind only GM, Ford, Toyota and Chrysler.
’Dissimilar’ to 2008
The industry’s slowdown since April is “dissimilar to 2008 when people were just sitting out of the market indefinitely,” said Jessica Caldwell, an Edmunds.com analyst in Santa Monica, California. “People that are going to buy have made a short- term delay instead of a long-term delay.”
Lower supply among competitors may result in industrywide sales this year finishing at the low end of Detroit-based GM’s forecast for 2011, Johnson said. GM forecasts 2011 sales of 13 million to 13.5 million vehicles, including medium-and heavy- duty trucks.
Ford reported 193,415 light-vehicle sales, missing analysts’ average estimate for a 12 percent increase. F-Series truck sales rose 6.7 percent and Focus deliveries surged 41 percent, the Dearborn, Michigan-based company said in a statement.
GM’s deliveries in the month rose to 215,358 vehicles from 195,380 a year earlier, according to a statement. The automaker’s total deliveries were expected to rise 18 percent. Cruze sales increased to 24,896 for the month, more than double the year-earlier deliveries of the Cobalt car that it replaces and the most among all cars in the industry for the month.
Trucks, Small-Car Supply
GM ended June with 122 days’ supply of full-size pickups, Johnson said yesterday, from 110 days at the end of May. The automaker is targeting full-size truck inventory of less than 110 days by the end of the year and may reduce output beyond idling some pickup plants this month, he said.
“We’re not going to overreact, and we’re not going to jump into the market with unusually aggressive incentives to get rid of what some may say is a way-too-high inventory,” Johnson said yesterday. “We can manage it throughout the rest of the year.”
GM rose 22 cents to $30.58 yesterday in New York Stock Exchange composite trading. Ford rose 23 cents, or 1.7 percent, to $14.02.
Ford’s Forecast
Ford continues to forecast 13 million to 13.5 million vehicle sales, including medium- and heavy-duty trucks, analyst George Pipas said June 30. Greater availability of models such as the Focus and Fiesta, which have fallen to 20 days’ supply, and cars such as Honda’s Civic and Toyota’s Corolla will help industry sales rebound in the second half, he said.
GM’s Aveo and HHR car models fell to less than 16 days’ supply at the end of June, Johnson said.
The light-vehicle seasonally adjusted annual sales rate failed to improve from the May rate of 11.8 million, according to Autodata. The pace in June was the slowest since June 2010.
Chrysler sales rose 30 percent 120,394. The Auburn Hills, Michigan-based automaker’s deliveries of the new 200 sedan were 7,219, and Jeep Grand Cherokee sales more than tripled.
--With assistance by Joshua Armstrong and Keith Naughton in Southfield, Michigan. Editors: Bill Koenig, Jamie Butters
To contact the reporters on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net; Alan Ohnsman in Los Angeles at aohnsman@blomberg.net
To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net
