Search site Search ticker symbol

Are you looking for a stock?

Try one of these

October U.S. auto sales up, but concerns deepen

Tags: Autos
A
A
 

U.S. auto sales rose to near their highest level of 2011 in October, early sales results showed, although shares in General Motors Co (GM-N) and other automakers tumbled on concern that the industry's slow recovery could falter.

GM posted a sales gain of 2 percent in October, a weaker gain than some analysts had expected for the top U.S. automaker.

Ford Motor Co's (F-N) U.S. sales rose 6 percent in October, within expectations.

Sales for Chrysler Group LLC jumped by 27 percent, its best result for October in four years.

Nissan October sales were up 18 percent as the Japanese automaker extended a winning streak against rivals Toyota and Honda .

Analysts said the sell-off in share prices in the auto sector reflected concern that a collapse of a bailout deal for Greece could trigger an economic crisis that would derail the slow but steady growth most have expected in the United States through 2012.

"We don't have a strong recovery to begin with and the last thing it needs is a couple of body blows," said Paul Ballew, chief economist at insurer Nationwide. "Every time this industry starts to feel better about itself, you kind of look at the world around and gulp."

GM said the slower pace of its October sales gain reflected its progress in selling down 2011 models and throttling back on incentives.

Analysts said the sharp sell-off in GM shares showed the sensitivity of the sector to concerns of a broader downturn.

"Overall, GM's October sales were not a surprise to us and consistent with our (fourth-quarter) model," Citi analyst Itay Michaeli said in a note for clients.

U.S. auto sales, which are tracked as one of the earliest snapshots of consumer demand, slipped in the spring and early summer amid concerns about the prospect of a renewed downturn in the U.S. economy and supply disruptions triggered by the March earthquake in Japan.

OCTOBER STRONG, BUT CONSUMERS STILL A WORRY

Analysts said the improved results for October showed some consumers have delayed vehicle purchases for as long as they could during the downturn. Used car prices are higher and the average age of cars and trucks on American roads is now about 11 years, the highest-ever reading for that indicator for pent-up demand.

Jonathan Browning, chief executive of Volkswagen Group of America, said the strong October sales for Volkswagen came despite the still-weak economy.

"There are still are some underlying consumer confidence issues," Browning said.

He said he expected industry-wide U.S. sales to end at about 13 million vehicles for the full year, up from 11.6 million in 2010. The sales rate in the first nine months of 2011 was 12.5 million.

Retail sales for Chrysler, which exclude discounted sales to fleet operators like car rental agencies, were up 40 percent in October, a rebound that underscored how far the weakest of the three U.S. automakers has bounced back since its 2009 bankruptcy and bailout.

Last month, Chrysler was third in U.S. sales behind cross-town rivals GM and Ford and slightly ahead of Toyota Motor Corp.

Nissan's U.S. sales chief, Al Castignetti, said he expected that fourth-quarter U.S. auto sales would hit the highest level of the year as consumers shrug off the economic and financial uncertainty.

"We've been dealing with this all year," he said. "People have been conditioned to deal with the headlines."

October was the first month that dealers at Nissan's rivals, Toyota and Honda, reported that their inventories had returned to near normal levels, seven months after the earthquake in Japan that disrupted the supply of key components including electronic sensors.

Nissan was quicker to bounce back from the March disaster.

Analysts are watching the impact of floods in Thailand, which could crimp production for the Japanese automakers in the months ahead.

Honda withdrew its annual earnings guidance on Monday, citing the strong yen and floods in Thailand, just as it was starting to recover from Japan's earthquake and tsunami.

Among Japanese automakers, Honda has been hit the hardest by the supply disruptions caused by both Asian disasters. The latest floods in Thailand have caused direct damage to the company's car factory in Thailand's Ayutthaya province.

Honda said its North American production would be half of its original plan from Nov. 2 through Nov. 10 at its six plants in the United States and Canada due to parts shortages resulting from the floods.

BETTER RESULTS IN CANADA 

Detroit automakers had a mixed sales month in Canada in October with General Motors and Chrysler selling more vehicles than a year ago while Ford Motor Co sold fewer.

Among Japanese automakers, Toyota Motor Corp.'s sales edged higher as it started to crawl out from under supply disruptions caused by the March earthquake and tsunami in Japan. But Honda Motor Co's sales fell again.

GM stole the top sales spot from Ford. GM said its vehicle sales rose 9 percent in October, boosted by demand for locally built compact crossovers such as the Chevrolet Equinox and GMC Terrain.

Overall, GM, whose brands include Chevrolet, Buick, GMC and Cadillac, sold 19,542 vehicles in October.

By comparison, Ford sold 19,190, a drop of 2.4 percent from a year ago, even as demand for its small, fuel-efficient Focus was again strong.

Ford said its car sales slipped 6.7 percent to 4,236 while truck sales fell 1.1 percent to 14,954, hampered by a shortage of F-150 trucks with EcoBoost engines.

Chrysler Canada reported a 12 percent jump in October vehicle sales, its strongest showing for the month since 2002, as the automaker said it continued to win market share from its rivals.

Chrysler sold 17,049 vehicles in October, boosted by increased sales of its Ram pickup and Jeep Wrangler.

"We are picking up market share and we are on a 23-month growth streak...," said Dave Buckingham, Chrysler Canada's chief operating officer.

Chrysler's performance this year marks a major turnaround from its 2009 bankruptcy and a U.S. federally funded bailout that handed control of the No. 3 U.S. automaker to Italy's Fiat SpA.

Elsewhere, Toyota Canada said it sold 14,980 Toyota, Lexus and Scion cars, trucks and sport utility vehicles in Canada last month, 3 percent more than in October 2010.

The Japanese carmaker has reported lower year-on-year sales for months after it was forced to cut production because of a shortage of parts from Japan following the devastating earthquake and tsunami there six months ago.

Rival Honda Canada continued to battle the after-effects of the earthquake, which resulted in a 13 percent drop in its October sales of Honda and Acura vehicles to 11,232 units.

The figures come a day after Honda warned it will have to slash its North American production in half due to part shortages stemming from flooding in Thailand.

"While we had just returned to full production in October after a six-month disruption caused by a parts shortage from the March earthquake in Japan, we are now faced with another parts shortage resulting from the devastating floods in Thailand," said Jerry Chenkin, executive vice-president of Honda Canada.

Honda's vehicle production will be at about 50 percent of its original plan until Nov. 10. Subsequent adjustments will be announced as they are determined, the company said.

CTV.ca CTV Two CTV News CTV News Channel BNN - Business News Network CP24