Bloomberg News

Chrysler Leads Truck-Driven Auto Sales to Best Month Since April

October 03, 2011

Oct. 3 (Bloomberg) -- Chrysler Group LLC, boosted by deliveries of Ram pickups, led September U.S. auto sales gains that exceeded analysts’ estimates. General Motors Co. and Ford Motor Co. also beat estimates on Silverado and F-Series trucks.

Chrysler sales climbed 27 percent to 127,334 cars and light trucks, according to a regulatory filing. GM deliveries rose 20 percent to 207,145 and Ford sales increased 9 percent to 174,860, the companies said in separate statements. Toyota Motor Corp., Honda Motor Co., and partners Hyundai Motor Co. and Kia Motors Corp. reported sales that fell short of estimates.

September light-vehicle deliveries rose to a seasonally adjusted annualized rate of 13.1 million, according to Autodata Corp. The average estimate of 14 analysts surveyed by Bloomberg was for a 12.8 million pace. The rate is the highest since April’s 13.2 million, when lost output caused by Japan’s tsunami started crimping supply of parts and finished cars.

“It was a good solid performance,” Paul Ballew, chief economist for Nationwide Mutual Insurance Co. in Columbus, Ohio, said in a phone interview. “The industry overall is in much better shape in terms of inventories. Gas prices dropped, and when you combine that with higher incentive spending, it boosted the truck mix.”

Deliveries by Chrysler, the U.S. automaker controlled by Fiat SpA, beat seven analysts’ average estimate for a 20 percent increase. Chrysler results included a 45 percent increase in Ram pickup sales. Deliveries of the new Durango sport-utility vehicle rose to 4,923 from 47 a year earlier, the Auburn Hills, Michigan-based company said in the filing.

‘Driven by Product’

“The strength is really driven by product, which is something Chrysler really hasn’t had in a long time,” Jesse Toprak, an analyst at Santa Monica, California-based auto researcher TrueCar.com, said in a phone interview. “They still have a higher reliance on SUVs and trucks, and in a month like this it helped them.”

GM deliveries were expected to increase 19 percent, the average of eight analysts’ estimates. Chevrolet Silverado sales surged 36 percent to 43,698, and GMC Sierra trucks gained 26 percent to 13,904, the Detroit-based company said today in a statement.

Ford’s light-vehicle sales were projected to rise 5.9 percent, the average of eight analysts’ estimates. Sales of F- Series trucks rose 15 percent, the Dearborn, Michigan-based company said in a statement. Pickups and SUVs accounted for 72 percent of Ford’s sales in September, up from 66 percent a year earlier.

Pent-Up Demand

“Significant gains in pickups suggests that there is pent- up demand in the small-business and work-truck area of the business,” Alan Baum, an industry consultant at Baum & Associates in West Bloomfield, Michigan, said in a phone interview. “The automotive factors are more important than the economic factors. The long-term demand remains.”

The strength in truck sales and Toyota and Honda’s return to full production last month boosted U.S. auto sales back to the pace reached before the March earthquake in Japan. The sales rate averaged 13.1 million in the year’s first four months before falling to as low as 11.6 million in June, according to Woodcliff Lake, New Jersey-based Autodata.

Sales declined 8 percent at Honda, exceeding the 6.1 percent drop that was the average of five analysts’ estimates. Deliveries slid 20 percent or more in each of the previous four months for the Tokyo-based automaker, which is scheduling overtime shifts at two Ohio assembly plants, Ron Lietzke, a spokesman, said in a Sept. 28 phone interview.

Honda Production

“Our U.S. manufacturing facilities are finally up to full production and the results are starting to show with increased CR-V, Pilot and Odyssey sales,” John Mendel, Honda’s executive vice president of U.S. sales, said in a statement. “Truckloads of new vehicles began arriving the last week of September and shoppers can now feel more confident that they will find what they want at their local Honda dealer.”

Toyota, Asia’s largest automaker, said sales of its three brands fell 17 percent last month, exceeding the 15 percent decline that was the average of five analysts surveyed by Bloomberg. The Toyota City, Japan-based automaker’s global production increased for the first time in 12 months in August.

“The worst is behind us and we expect to exceed year-ago sales levels beginning in October with continued growth throughout the fourth quarter,” Bob Carter, Toyota’s group vice president of U.S. sales, said in a statement today.

Nissan Sales Climbs

Nissan Motor Co., whose better supply of parts has buoyed inventory levels above its Japan-based rivals, reported a 25 percent gain for September, better than the 18 percent average of five analysts’ estimates. The company said its Nissan-brand cars rose a combined 32 percent.

With vehicle production and inventory recovering for Toyota and Honda, the fourth quarter may be the year’s strongest for auto sales, Al Castignetti, Nissan’s vice president of U.S. sales, said in a phone interview.

“Inventory levels for all manufacturers are going to get back to normal, and people who have been sitting on the fence are likely to get back in the market,” he said. “If we have another month like September, I’d say all bets are off.”

Hyundai, South Korea’s largest automaker, and its affiliate Kia combined to sell 14 percent more vehicles than a year earlier, less than the 20 percent gain that was the average of three estimates. Both automakers are based in Seoul.

Volkswagen AG’s namesake brand sales climbed 36 percent to 27,036, according to an e-mailed statement. Deliveries of the Jetta compact sedan surged 40 percent to 15,023, said Volkswagen, whose U.S. unit is based in Herndon, Virginia.

GM Inventory

GM’s full-size pickup inventory slid to 208,650, from 212,520 a month earlier. Supply of the trucks dropped to 88 days from 107 days at the end of August on a selling-day adjusted basis, the company said. GM reiterated that it is targeting year-end inventory of about 200,000 full-size pickups.

“GM had really overproduced on Silverado pickups in particular and have been trying to figure out a way to sell them,” Jeremy Anwyl, chief executive officer of auto researcher Edmunds.com, said in a phone interview. “Usually we have a summer sell down in July. It didn’t start until Labor Day weekend. People who were waiting for deals kept waiting until September.”

GM fell 45 cents, or 2.2 percent, to $19.73 at 4 p.m. in New York Stock Exchange composite trading. Ford slid 30 cents, or 3.1 percent, to $9.37.

Gas Prices

Lower gasoline prices may have helped improve demand for pickups, said Rebecca Lindland, an analyst with IHS Automotive in Lexington, Massachusetts. The average price for unleaded gasoline fell almost 20 cents, or 5.4 percent, in September to $3.43 a gallon, according to AAA.

Cheaper gasoline and boosted output of Toyota’s Corolla and Honda’s Civic may have pressured sales of GM’s Chevrolet Cruze and Ford’s Focus. Chevrolet Cruze deliveries fell short of 20,000 for the first time since April, and Focus sales declined 24 percent to 10,309. Corolla deliveries fell 23 percent and Civic slid 26 percent.

Cruze deliveries dropped sequentially because of seasonal factors, Don Johnson, GM’s vice president of U.S. sales, said on a conference call. Ford was building up inventory of the Focus, which has been in production for “several months,” Ken Czubay, Ford’s U.S. sales chief, said on a conference call.

“The stock as of today is in darn-good shape; it was just a ramp up last month,” Czubay told analysts and reporters. “Put it on the calendar for a month from now, we’re going to have a good October for Focus.”

--With assistance from David Welch and Keith Naughton in Southfield, Michigan, Cecile Daurat in Wilmington and Alan Ohnsman in Los Angeles. Editors: Bill Koenig, Jamie Butters

To contact the reporters on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net; Tim Higgins in Southfield, Michigan at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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