The US Auto Industry Sales Falters in September
According to an executive of Ford Motor (F) the US auto market is “still a healthy industry but it’s taking a little bit of a breather from the last three months.” LMC Automotive forecasts that the seasonal adjusted annualized rate (SAAR) would drop to 15.2 million in September, which isn’t bad, however it is softer compared to other months which posted strong numbers. Analysts of JP Morgan, Barclays and TrueCar.com expect the seasonal adjusted annual rate to be around 15.4 million, while that of Deutsche Bank estimate it to settle at 15.3 million.
Ford’ President of Americas Joe Hinrichs said that the growth pace of the industry slowed down after the Labor Day weekend. Edmund.com forecasts September sales to decline 3.7% compared to last year figures. As per the Edmund, Labor Day sales are the prime reason for such a sale drop. Most automakers are expected to report decline in sales for the month. Let us take a brief look at what to expect from the individual automakers.
A look at the performance
Edmund estimates that 1.14 million vehicles will be sold in the month of September, which is 24% down from August sales of 1.5 million cars and trucks. Korean based auto manufacturer Hyundai Motor is expected to experience sales decline of 15%. Japanese auto players are also estimated to witness sales drop. Of them, Nissan (NSANY) is expected to see steep sales drop of 8.9%, Honda Motors (HMC) should report a decline of approximately 5% for the month, while global lead automaker Toyota (T) is forecast to record 1.6% drop.
Detroit based automakers Ford and Chryslers are the only exceptions that could post year over year sales gain. The entire credit goes to sales of trucks and SUVs which continue to stay strong. However, largest US automaker General Motors (GM) is estimated to witness sales decline of 7%.
Factors that pulled down sales numbers
There are a host of reasons that led to higher decrease than expected for the month. Car dealers complained that sales were down steeper than expected as consumer attention got shifted to the religious holidays and the new school year. TrueCar senior analyst Jess Toprak said that the uncertainty surrounding the financial market has caused some individuals to curb huge spending.
However, as fundamentals remain strong, the year is expected to see 15.7 million car sales for the entire year. Dealers are confident that the industry uptrend and pent-up demand from consumers is strong enough to keep the industry growing at a decent pace if not the terrific pace at which it grew in the first eight months of the year. Customers are willing to spend more on cars, money is cheap and interest rates are friendly. All these factors put together would keep sales growing at a fair pace. The last quarter of the year is expected to be good with a strong October sales.
It would be interesting to see how the current year ends, particularly since December traditionally offers huge incentives to pull up sales numbers and clear the closing stock. 2014 is not expected to be as rosy a year as 2013 which was a year of blessing for the US auto sector with incredible sales. The coming year should be flatter comparatively, yet good enough with decent growth.