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Auto sales likely to be down industry-wide

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Auto sales are expected to slide
September another weak month in what could be the most sluggish year for sales since 1998
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Dee-Ann Durbin | Associated Press | Link to Original Article @ DetNews


DETROIT -- September auto sales are expected to be weak because of a credit crunch, high gas prices and the troubled housing market, reflecting an overall slowdown for the year but little effect from the brief strike against General Motors, industry analysts say.

Indeed, the impact of the two-day strike could be small in what could become the most sluggish year for sales since 1998, according to industry experts.

Jesse Toprak, chief economist for the auto information site Edmunds.com, predicts Honda Motor Co. will be the only automaker to report an increase in sales, helped by the arrival of the new 2008 Honda Accord. Automakers are scheduled to report September sales Tuesday.

"No one is immune to this general weakness we have in the marketplace," Toprak said.

Auto sales will probably be down 4 percent compared to last September, JPMorgan auto analyst Himanshu Patel said.

Patel predicts Ford Motor Co. will be among the weakest performers, with double-digit declines from last September, as the automaker cut back on incentives as well as sales to rental car companies. Patel said GM should be flat while Chrysler LLC will also see some declines.

Ford's continuing slide in U.S. market share should be a source of concern for investors, Lehman Brothers analyst Brian Johnson said.

Johnson said Ford's retail sales -- which don't include sales to rental, government or corporate fleets -- are down about 10 percent for the year, as Ford's aging F-150 faced increasing competition from newly redesigned GM pickups, the new Toyota Tundra and high incentive spending on the Dodge Ram. The success of Ford's crossovers are also eating into sales of its mid-size sport utility vehicles, Johnson said.

"We believe that Ford will continue to suffer severe market share loss next year, as a result of sharply increased competition for some of Ford's key large trucks and the company pulling away from models oriented towards fleet," Johnson said in a recent note to investors.

After a slight uptick in August sales, September will fall back into the sluggish pace the industry saw in June and July. Patel forecast an annualized selling rate of 15.9 million vehicles in September.

The rate shows what sales would be if they continued at the same pace for the full year. The rate was 16.6 million in 2006.

Johnson anticipates the weakness will continue and the industry will end 2007 with full-year sales of 16 million vehicles. If so, that would be the slowest year since 1998, when a 54-day strike crippled GM's production, and would be 1 million vehicles lower than the peak of 17.3 million in 2000, according to Ward's AutoInfoBank. Johnson said the Federal Reserve's recent rate cut could help things rebound next year.

The United Auto Workers' two-day strike against GM in September may have had a minor impact on consumers who were deciding whether to buy or not, Toprak said. But he said a strike that short couldn't have made a measurable difference.

Toprak said GM had about two months' worth of vehicles in its inventory at the time of the strike.

"If anything, it may have helped them in terms of giving them a couple days' break to adjust production in terms of demand," he said.

GM lost production of about 25,000 vehicles due to the strike, according to the automotive forecasting firm CSM Worldwide Inc.
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I think GM is going to be selling fleet again this month...

and for one, i really arent too upset if they are...

As long as it isnt to rental agency''s i dont see a problem.

but also like Lutz said... they are attributing more then 40% of their new vehicles sales to vehicles that are recently launched... thats a landmark for GM... maybe thats why they seem to be doing better...

perhaps since they've gotten a couple of financial burdons out of the way, they can handle considerable incentives again...

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Staying flat in a declining market isn't bad (actually it's quite good), as long as the average transaction price doesn't suffer much. I hope GM can do it.

Edited by ZL-1
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The general economy is still weak, and I expect to see further slides in sales. Glad to see the general is holding flat.

Chris

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Ford will still keep showing deep declines until November, when the Taurus was pretty much phased out completely last year. The Taurus was still selling 20,000+ units in September '06. Hopefully the new Taurus will start to regain market share.

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