Bloomberg News

Chrysler Poised to Lead U.S. Auto Sales Gains as Gas Rises: Cars

April 02, 2012

Joe DeLucia with a Dodge Ram pickup truck in Peoria, Illinois. Photographer: Daniel Acker/Bloomberg

Joe DeLucia with a Dodge Ram pickup truck in Peoria, Illinois. Photographer: Daniel Acker/Bloomberg

Heidi Vouri got a new job 35 miles from home and commuting in a 14-year-old gas guzzler doesn’t cut it with fuel prices rising. Her solution: Buy a new car.

“I’m definitely shopping for some gas mileage,” said Vouri, 23, who lives near Indianapolis and started work as a private investigator in December. To replace the 1998 GMC Jimmy she drove through college, she has set her sights on a 2012 Subaru Impreza hatchback, which is rated to deliver as much as 30 mpg in combined city and highway driving.

Her experience shows that rising gas prices can help spur demand for new vehicles. Job gains and buyers who put off car purchases during the recession are driving the fastest three- month auto-sales pace in four years, even as a gallon of gasoline became 20 percent more expensive. Analysts are boosting 2012 industry sales estimates and automakers are increasing production.

Light-vehicle sales in March, set for release tomorrow, may have run at a 14.5 million seasonally adjusted annual rate, the average estimate of 16 analysts surveyed by Bloomberg. That would exceed the 13.1 million pace from a year earlier and set an average rate of 14.6 million for the first quarter, ahead of analysts’ estimates for full-year deliveries. Small-car sales were especially strong.

“There’s no question that vehicle sales at the start of the year are ahead of expectations,” said Jeff Schuster, senior vice president of forecasting for LMC Automotive in Troy, Michigan. “Pent-up demand is causing buyers to come back into showrooms. Vehicles are older and need to be replaced, and there’s a strong feeling of further recovery ahead.”

Total light-vehicle sales may rise to 1.42 million, the average of eight analysts’ estimates. That would be the highest monthly total since August 2007, according to Autodata.

Jobs, Confidence

The 1.2 million jobs created the past six months, the best six-month job growth stretch since 2006, has sent unemployment to a three-year low, according to Labor Department figures. The Conference Board’s consumer confidence index held near the highest level in a year in March as a growing number of Americans said they planned to buy cars, homes and appliances, the New York-based private research group said on March 27.

The improving economy is softening the blow of climbing gasoline prices. The average price for a gallon of regular unleaded rose to $3.93 (3AGSREG) through March 29, according to AAA, the nation’s largest motoring group.

Analysts at Morgan Stanley, Deutsche Bank AG, Citigroup Inc. and TrueCar.com last month increased their estimates for full-year sales. The four companies increased 2012 estimates by an average of 550,000 vehicles to 14.5 million.

Buyers Returning

Compact and subcompact sales were 23 percent of U.S. retail sales through the first 18 days of March, the highest level since the government’s “cash for clunkers” program in August 2009, according to LMC Automotive. Compact cars such as Honda Motor Co. (7267)’s Civic are spending 42 fewer days on dealer lots before being sold compared with the 2011 industry average.

“The people who have been sitting on the sidelines and want to get a less-expensive car, which probably correlates with better fuel economy, those people are more able to get financed and at the lower borrowing amounts,” said Alan Baum, principal of Baum & Associates, a provider of auto-industry analysis in West Bloomfield, Michigan.

Auto sales gains were probably widespread in March, with General Motors Co. (GM:US) and Toyota Motor Corp. (7203) posting increases of at least 15 percent and Chrysler Group LLC reporting 31 percent growth from a year earlier, according to analyst estimates.

If Chrysler matches the average increase estimated by 10 analysts surveyed by Bloomberg, it would be the Auburn Hills, Michigan-based automaker’s fifth consecutive monthly sales increase of at least 30 percent.

Chrysler’s Streak

Chrysler Group’s car deliveries may have accelerated 71 percent, topping a 24 percent boost in light-truck sales, according to estimates by Brian Johnson, an analyst at Barclays Capital in New York. New or refreshed models such as the 300 sedan and Fiat (F) 500 subcompact were in their first month of sales in March 2011.

GM, boosted by the Chevrolet Sonic subcompact that gets 33 miles (53 kilometers) per gallon in combined city and highway driving, may report a 19 percent increase in March sales, the average of 10 analysts’ estimates. GM said today it expects combined sales of at least 100,000 units for its 12 models, including the Sonic, that get 30 mpg or more in highway driving.

“Clearly as gas prices go up and as there’s a bit of volatility in gas prices, that’s driving consumers to look for those kinds of options when they buy a new vehicle,” Don Johnson, GM’s U.S. sales chief, said today on Bloomberg Television’s “In The Loop With Betty Liu.”

Volt Sales

Sales of GM’s Chevrolet Volt rose to more than 2,000 in the month, he said. “This month will be a very good month for Volt.” The model’s previous monthly best was 1,529 in December.

Ford Motor Co. (F:US) sales may rise 5.5 percent, the average of 10 estimates. The Dearborn, Michigan-based automaker delivered 90 percent more Focus compacts in the first two months of this year than a year earlier.

Toyota probably increased total sales by 15 percent, according to seven analysts’ average estimate. The Toyota City, Japan-based automaker began U.S. deliveries of its 50 mpg Prius c hybrid subcompact last month. Sales for the Prius “family” of four models, including the original hatchback, exceeded 25,000 units in March, a record for the model line, Bob Carter, group vice president of U.S. sales, said in an e-mail today.

Supply Rebounding

Toyota and Honda’s inventories are recovering after Japan’s tsunami in March 2011 disrupted their production and depleted their car inventories to lows of 34 days and 28 days’ supply, respectively, in August. Entering last month, Toyota carried 36 days’ supply and Tokyo-based Honda had 50 days, according to Kelley Blue Book.

Sales for Tokyo-based Honda may have increased 5.3 percent, the average of seven analysts’ estimates. Vouri, the investigator who lives near Indianapolis, said her mother bought a used 2008 Honda Accord in May. With used-vehicle prices setting new all-time highs in each of the last three years, according to Manheim Auctions, she sees buying new as the better option.

“Vehicles that are two, three or four years old are within $3,000 or $4,000 the cost of brand-new ones,” she said in a phone interview. “I’d rather spend a little bit more and be satisfied and get exactly what I want.”

Nissan Motor Co., the Yokohama-based automaker introducing its revamped Altima sedan this week at the New York auto show, may increase sales 11 percent, the average of seven analysts’ estimates.

Volkswagen, Hyundai-Kia

Volkswagen AG (VOW3), which is targeting U.S. sales growth of more than 10 percent this year, may increase combined sales of its Volkswagen and Audi brand vehicles by 35 percent in March, the average of three estimates.

Affiliates Hyundai Motor Co. (005380) and Kia Motors Corp. (000270) may combine to sell 18 percent more vehicles than a year earlier, the average of five analysts’ estimates. The Seoul-based automakers have redesigned the Hyundai Accent and Kia Rio models and introduced the new Hyundai Veloster three-door coupe since mid 2011.

The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from March 2011. Forecasts for the seasonally adjusted annualized rate, or SAAR, are in millions of light vehicles.

March had 28 selling days, one more than the year-earlier period.


                              GM     Ford   Chrysler   SAAR

Rod Lache                    21%     3.6%      27%     14.4
(Deutsche Bank)
Peter Nesvold                19%     4.1%      35%     14.4
(Jefferies)
Patrick Archambault          25%     3.9%      29%     14.6
(Goldman Sachs)
Joseph Spak                  18%     6.2%      21%     14.4
(RBC)
Brian Johnson               7.6%     9.0%      37%     14.5
(Barclays Capital)
Emmanuel Rosner              13%     7.9%      29%     14.5
(CLSA)
Chris Ceraso                 19%     7.9%      27%     14.4
(Credit Suisse)
Matthew Stover                NA      NA       NA      14.5
(Guggenheim)
Adam Jonas                    NA      NA       NA      14.5
(Morgan Stanley)
Itay Michaeli                 NA      NA       NA      14.4
(Citigroup)
George Magliano               NA      NA       NA      14.5
(IHS Automotive)
Jeff Schuster                 NA      NA       NA      14.1
(LMC Automotive)
Alan Baum                     NA      NA       NA      14.4
(Baum & Associates)
Jessica Caldwell             21%     4.8%      35%     14.9
(Edmunds.com)
Jesse Toprak                 21%     1.4%      32%     14.5
(TrueCar.com)
Alec Gutierrez               24%     6.0%      35%     14.6
(Kelley Blue Book)

Average                      19%     5.5%      31%     14.5

     The following table shows selling-day adjusted estimates
for company car and light-truck sales as a percentage change
from March 2011.

                              GM     Ford   Chrysler

Rod Lache                    17%     1.5%      23%
(Deutsche Bank)
Peter Nesvold                15%     0.4%      30%
(Jefferies)
Patrick Archambault          20%     0.2%      25%
(Goldman Sachs)
Joseph Spak                  14%     2.0%      17%
(RBC)
Brian Johnson               3.8%     5.1%      32%
(Barclays Capital)
Emmanuel Rosner             9.4%     4.0%      24%
(CLSA)
Chris Ceraso                 20%     9.0%      37%
(Credit Suisse)

Average                      14%     3.2%      27%

To contact the reporter on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net

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


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Companies Mentioned

  • GM
    (General Motors Co)
    • $30.04 USD
    • -0.89
    • -2.96%
  • F
    (Ford Motor Co)
    • $13.78 USD
    • -0.62
    • -4.5%
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