Bloomberg News

Chrysler Tops U.S. Carmakers in Best Month Since Clunkers

September 05, 2012

Chrysler Sales Increase 14% to Extend U.S. Streak on Dart Gain

A 2013 Dodge Dart sits on display during a press conference at the Chrysler Group LLC assembly plant in Belvidere, Illinois. Chrysler forecast an industry sales rate of 14.6 million in its statement. Photographer: Daniel Acker/Bloomberg

U.S. auto sales in August continued to outpace the anemic economic recovery, smash through estimates and deliver a good-news story for President Barack Obama and the Democrats just in time for their convention.

Chrysler Group LLC, Ford Motor Co. (F:US), General Motors Co., Toyota Motor Corp. and Honda (7267) Motor Co. said U.S. sales in August rose more than analysts estimated as new models such as the Dodge Dart, Ford Escape and Chevrolet Spark built on gains earlier this year. Light-vehicle deliveries last month were at the fastest pace since the government’s 2009 “cash for clunkers” program.

“It just is a story that makes it easier for the president to take credit for what’s happening in the U.S. auto industry,” Jeremy Anwyl, vice chairman of auto-market researcher Edmunds.com, said in a telephone interview yesterday. “When you’re dealing with headlines and sound bites, these results add credibility to the statement, ‘Look at the good I did.’”

Republican nominee Mitt Romney has criticized the bailout. His vice presidential choice, Paul Ryan, made it clear that autos will be much-debated in next two months when he cited a shuttered sport-utility vehicle plant as part of Obama’s failures in his acceptance speech. That plant had stopped making GM trucks before Obama became president.

U.S. auto sales are on pace to exceed 14 million vehicles for the best year since 2007 and to gain at least 10 percent for a third-straight year, the first such streak since 1973. The industry’s rebound has spurred hiring at automobile assembly plants from Michigan to Alabama, as Toyota and Honda are both on pace this year to break their 2007 records for North American output.

Third Shifts

GM, adding third shifts to factories in four states, has created 4,300 jobs working odd hours. Automakers, including Chrysler, Nissan Motor Co. (7201) and Kia Motors Corp. (000270), have announced plans to add production beyond the normal two-shift day in at least 15 plants.

Michigan’s unemployment rate has declined to 9 percent as in July from a 26-year high of 14.2 percent (USUSMICH:US) in August 2009, according to the Bureau of Labor Statistics. The U.S. unemployment rate was 8.3 percent in July.

The stronger-than-expected results from the five biggest sellers of cars and light trucks in the U.S. “is an affirmation that the automotive market is strong,” Alan Baum, principal of auto-industry forecaster Baum & Associates in West Bloomfield, Michigan, said yesterday in a telephone interview. “This would normally be a time in the year when model year-end incentives kick in, and there were some targeted incentives in place that were effective.”

Topping Estimates

Chrysler sales last month increased 14 percent, the Auburn Hills, Michigan-based company said yesterday in a statement. Ford’s car and light-truck deliveries rose 13 percent and GM’s climbed 10 percent. The automakers topped 10 analysts’ average estimates of 9.9 percent for Chrysler, 8.5 percent for Ford and 3 percent for GM.

Honda and Toyota (7203) sales surged 60 percent and 46 percent to exceed seven analysts’ average estimate for gains of 59 percent and 40 percent. Accord deliveries climbed 89 percent to 34,848, the Tokyo-based automaker said yesterday in a statement. Sales of the Prius line of hybrid models and RAV4 sport-utility vehicle both more than doubled, according to a statement yesterday on Toyota City, Japan-based Toyota’s website.

Nissan Motor Co. sales rose 7.6 percent, according to a statement. The Yokohama, Japan-based automaker missed seven analysts’ average estimate for a 12 percent increase. Deliveries of the Altima, which Nissan is updating for the 2013 model year and adding capacity, gained 12 percent to 25,889.

Chrysler Gains

Chrysler, the automaker controlled by Fiat SpA (F), said deliveries of the Dart almost quadrupled from a month earlier to 3,045, helping extend its streak of U.S. sales gains to 29 months. Chief Executive Officer Sergio Marchionne is counting on a steady climb in demand for Dart, introduced in June, as Chrysler continues to update its lineup.

“We expect Chrysler to continue to gobble up incremental share in the compact-car segment,” Alec Gutierrez, an analyst at Irvine, California-based auto-market researcher Kelley Blue Book, said in a telephone interview. “Chrysler is still trying to get enough selection of variety out to their dealers to satisfy demand. Their product portfolio has improved.”

Ford, which just introduced a new Escape small SUV, said sales of the model rose 37 percent to 28,188. Ford also said it added a third shift to the Escape factory in Kentucky last month to meet demand. Deliveries of F-Series pickups climbed 19 percent to 58,201, the model line’s best monthly total this year, according to a statement yesterday.

No Apologies

“There’s nothing in our lineup that I have to apologize for,” Beau Boeckmann, vice president of Galpin Motors in Van Nuys, California, said yesterday in a telephone interview. The dealership, Ford’s largest in the U.S., had a 20 percent sales gain on the strength of new models.

U.S. light-vehicle sales accelerated to a 14.5 million seasonally adjusted annualized rate, according to researcher Autodata Corp. That’s the market’s best sales pace since 14.6 million in August 2009, when the U.S. government offered incentives for buyers to exchange older vehicles for new models. The industry exceeded 15 analysts’ average estimate of 14.2 million in a Bloomberg News survey.

The sales pace in August 2011 was 12.5 million.

Industrywide deliveries this year through August climbed 15 percent to 9.71 million, Woodcliff Lake, New Jersey-based Autodata said yesterday in an e-mailed statement.

2012 Outlook

GM expects full-year 2012 U.S. light-vehicle sales will be in the 14 million to 14.5 million range, Sue Yingzi Su, GM’s senior economist, told reporters yesterday on a conference call, reiterating a previous estimate. The forecast could be narrowed, to perhaps “slightly” above 14 million, she said.

GM slipped 0.2 percent to $21.31 at the close yesterday in New York. Shares of Dearborn, Michigan-based Ford rose 0.7 percent to $9.41.

General Motors Corp. entered bankruptcy court protection on June 1, 2009, and the new General Motors Co. (GM:US) emerged on July 10, 2009. The U.S. Treasury and other owners (GM:US) sold $15.8 billion of common shares and the automaker sold $4.35 billion of preferred shares in a November 2010 initial public offering.

Since bankruptcy, Detroit-based GM has announced more than $7.3 billion of investments for U.S. factories that retain or create 18,600 jobs, said Bill Grotz, a spokesman. The company earned a record full-year net income of $9.19 billion in 2011 while surpassing Toyota as the world’s top-selling automaker.

GM ran an eight-week promotion that expired yesterday for its Chevrolet brand that offered no-haggle pricing on 2012 car and truck models plus a money-back guarantee. The automaker set monthly records for the Chevy brand’s Spark, Sonic, Cruze and Volt models, according to a statement yesterday.

Gasoline Prices

Car sales may have been boosted in part because the national average price for regular unleaded gasoline climbed 8.7 percent in August, the biggest monthly increase since April 2011, to $3.83 a gallon, according to AAA, the biggest U.S. motoring organization.

Passenger-car deliveries climbed 28 percent to 650,576, topping the 13 percent gain in light-truck sales to 634,626, according to Autodata.

Honda, GM, Toyota and Chrysler all are using so-called stair-step programs this year to give rewards to dealers whose sales reach thresholds set by the companies. Programs such as Honda’s, which started in March to boost Accord deliveries and ran through August, offer incentives for dealers of as much as $1,000 per Accord sale and extend bonuses retroactively for cars sold in previous months, too.

Accord Clearance

Honda’s six-month Accord program helped to wind down inventory of the 2012 model to clear way for the redesigned 2013 Accord, and kick-started Honda’s recovery in the U.S. from inventory shortages and corresponding market-share losses caused by Japan’s March 2011 tsunami.

U.S. market share for Toyota City, Japan-based Toyota rose 1.7 percentage points through August to 14.4 percent and 0.7 percentage points for Honda to 9.8 percent, according to Autodata.

South Korea’s Hyundai Motor Co. (005380) and Kia Motors Corp. combined to sell 11 percent more vehicles in August than a year earlier. That was less than the 19 percent average gain of five analysts’ estimates. Hyundai said deliveries of the Sonata and Genesis sedans slipped in August from a year earlier in a statement. Kia’s sales of the Optima sedan more than doubled to 13,949, according to a statement.

Volkswagen Gains

Volkswagen AG (VOW), targeting more than 500,000 vehicle sales in the U.S. this year, increased combined deliveries of its Volkswagen and Audi brands by 48 percent in August, beating the average 46 percent average gain of four analysts’ estimates. The Volkswagen brand sold 41,011 vehicles last month, a 63 percent increase from a year earlier, according to a statement.

VW brand sales, the best August since 1973, were fueled by sales of the new Passat sedan, which rose to 10,090 last month compared with 314 a year earlier, the company said in a statement.

“I haven’t seen any softening,” Frank Trivieri, vice president of sales at Volkswagen of America, said yesterday on a conference call.

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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