10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

GM, Ford, Toyota, and Nissan Sales Warm Up After Winter Doldrums

Live investor

Live investor

3 followers

The U.S. auto industry has recovered at a fantastic pace in the past few years post recession. Last year the auto sector reported a rise of 8% year over year by selling 15.6 million passenger cars and light trucks. Industry experts expect the current year to register softer growth and have estimated the vehicles sales to touch 16 million units in the current year.

Analysts believe that buyers who held back their desire to buy a new car have already purchased one in the past few years, and so the industry growth would be flattish. This mood was reflected in the sales during the first two months of the year, but March seems to have reversed the trend, showing that the market still has quite a bit of hunger for vehicles. Let’s reflect the month by the numbers.

Quantifying the Growth

Overall vehicle sales grew 5.7% to 1.54 million which reflected strong demand and an urge to upgrade aging cars with the new ones. The sales number thrashed analyst expectations of 2% growth, thereby improving the industry annualized selling rate to 16.4 million, according to sauto research firm Autodata Corp.

The top Detroit auto giant General Motors (GM), that’s caught in a blizzard of recalls, sailed through the month by registering 4% sales growth. Second Detroit automaker Ford (F) registered a growth of 3.3% during the month, while Japanese counterpart Toyota (TM) saw sales move up by a good 4.9%. Nissan (NSANY), another Asian company recorded a rise of 8.3% in sales. Luxury car giant BMW (BAMXF) reported sale rise of 8% to 35,762 vehicles.

Honda (HMC), on the other hand, didn’t really enjoy the month as sales plunged 2% year over year. Hyundai Motor (HYMTF) too suffered a slip of 1.9% by delivering 67,005 units. Volkswagen (VLKAY) also shares a similar struggle story as its sales continued to get a beating – its aging models are to be blamed for this. The company posted 2.6% drop in sales by selling 36,717 vehicles during the month.

Toyota group vice president Bill Fray said that March sales were so good that it pushed up the first quarter figures ahead of last year’s comparable quarter. He said, “Toyota dealers had their two best sales weekends of the year late in the month, and we're optimistic that momentum will spring us in into April”.

Reasoning it Out

Solid sales during the month came as a big relief to industry players particularly after the winter doldrums. Sales in the first two months were quite discouraging which made most to belief that it’s the beginning of a sluggish year after the past few years that saw robust growth.

Sales picked up in the latter half of the month when automakers attracted buyers by giving deep discounts to clear the stock. TrueCar.com noted the discounts went as high as 7.9% to $2,778 in March. Even so, the average price paid per vehicle rose $30,986, which means that people took advantage of huge discounts to buy costlier car versions.

The Road Ahead

Automakers are quite optimistic about April, expecting that the mood built in March would continue in the coming months. Ford vice president of the U.S. sales John Felice shares a similar sentiment that March sales have improved expectations for April. In addition the recovery of the economy would also help in lifting consumer confidence. Potential buyers could finally walk into a showroom and satisfy their pent-up demand. With competition intensifying, and each automaker preparing to report stronger volumes to push their top and bottom line, it would be interesting to watch how they perform in the coming months.


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK