By Mike Ramsey
June 30 (Bloomberg) -- The U.S. auto-sales slide may have slowed in June, with an annual rate of more than 10 million for the first time this year as consumers gain confidence and shrug off bankruptcies at General Motors Corp. and Chrysler LLC.
The annual sales rate for June was 10.1 million cars and light trucks, based on 7 analyst estimates in a Bloomberg survey. That would be down 26 percent from 13.6 million a year earlier. Monthly sales, announced tomorrow, may have slid 36 percent at Chrysler, 30 percent at GM and 17 percent at Ford Motor Co., according to the average of five analyst forecasts.
A seasonally adjusted industrywide rate at that level may signal a second-half rebound, after a drop in the first six months that was the steepest since at least 1976, according to Bloomberg data. Consumer sentiment is turning more optimistic, and the rise in the jobless rate may be slowing.
“With the noise from GM and Chrysler bankruptcies diminished, improving confidence and still-low auto interest rates, we believe we are seeing a genuine stabilization in sales rates that sets the stage for a material uptick” in the second half, Patrick Archambault, an analyst at Goldman Sachs Group Inc. in New York, said in a June 26 note to investors.
Chrysler’s government-backed reorganization ended June 10, after just 42 days, and Detroit-based GM, which filed for court protection June 1, is on a similar path that may be finished by the end of July.
Chrysler’s retail sales, those to individual consumers rather than to fleet customers such as rental companies, outperformed the industry in May, indicating consumers weren’t put off by the bankruptcy process. Industywide sales fell 34 percent in May and 37 percent for the year’s first five months.
Positive Indicators
An improvement in auto sales would add to positive economic indicators such as a slowing in new jobless claims and improving consumer confidence. The U.S. recession began in December 2007.
“There are reasons to be optimistic in a cautious sense” for autos, said Jeff Schuster, executive director of forecasting at J.D. Power & Associates Inc. in Troy, Michigan. “There has been a true strengthening in retail sales.”
Rebounding to a 10 million annual sales pace would help GM and Auburn Hills, Michigan-based Chrysler, which have tried to adjust their costs to break even at that rate. U.S. deliveries totaled 13.2 million last year and averaged 16.8 million from 2000 through 2007.
Ford, the only U.S. automaker that hasn’t taken a federal bailout, said yesterday that its domestic market share rose in June.
“The worst is behind us,” George Pipas, sales analyst for the Dearborn, Michigan-based company, told reporters. “We may see economic growth in the second half and a higher level of auto sales.”
Topping Toyota
Ford, which was passed by Toyota Motor Corp. in annual U.S. sales in 2007, has outsold the Toyota City, Japan-based company for the past two months. Toyota’s June sales probably declined 32 percent, the average of three analysts’ estimates.
Sales may have dropped 35 percent for Honda Motor Co. and 28 percent for Nissan Motor Co., according to those analysts. Both companies are based in Tokyo.
Seoul-based Hyundai Motor Corp., South Korea’s largest automaker, may report an 18 percent slide, according to Edmunds.com, a market-research firm in Santa Monica, California.
Auto sales in the second half may benefit from the “cash- for-clunkers” legislation signed into law June 24 by President Barack Obama. It gives new-car buyers as much as $4,500 toward a new vehicle if they trade in an eligible older vehicle for a model with better fuel economy. That subsidy may be available by August, after a 30-day period to set the rules.
The program may increase new-vehicles sales 10 percent through year-end at AutoNation Inc., the biggest publicly traded U.S. car retailer, Chief Executive Officer Mike Jackson said in an interview last week.
Unemployment, Consumer Confidence
Consumers also may be more willing to purchase vehicles as the rise in the jobless rate slows. The U.S. unemployment rate probably climbed 0.2 percentage points in June to 9.6 percent, according to the median of 58 estimates in a Bloomberg survey. The increase would be the smallest since November.
The economists in the Bloomberg survey also predict that consumer confidence this month rose to its highest level since September. That would follow a May jump in the Conference Board’s consumer sentiment index that was biggest in six years.
Ford rose 17 cents to $5.78 at 4:15 p.m. yesterday in New York Stock Exchange composite trading. The shares have more than doubled this year.
Ford’s 7.45 percent bonds due in July 2031 gained 1.5 cents to 57.5 cents on the dollar, yielding 13.5 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.
The following table provides estimates for car and light-
truck sales in the U.S. Estimates for companies are a percentage
change from June 2008. Forecasts for the seasonally adjusted
annual rate, or SAAR, are in millions of vehicles.
The SAAR average is based on forecasts from 7 analysts. The
estimates are based on daily selling rates. June had 25 selling
days, one more than last year.
GM Ford Chrysler SAAR
Joseph Barker N/A N/A N/A 10.3
(CSM Worldwide)
Christopher Ceraso -31% -15% -39% 10.2
(Credit Suisse)
Gary Dilts N/A N/A N/A 10.3
(J.D. Power)
Rod Lache -26% -14% -33% 10.2
(Deutsche Bank)
Jesse Toprak -32% -19% -32% 10.1
(Edmunds)
John Wolkonowicz -N/A% -N/A% -N/A% 9.5
(Global Insight)
Patrick Archambault -31% -17% -35% 10.0
(Goldman Sachs)
John Sousanis -30% -19% -42% N/A
(Ward’s Automotive)
Analysts’ average -30% -17% -36% 10.1
To contact the reporters on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net
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