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General Motors, Chrysler and Japanese Automakers Have a Pepped Up Season in the U.S.

July 05, 2014 | About:
Quick Pen

Quick Pen

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The U.S. auto sales have been one of the bright spots even amid sluggish economic growth. Though analysts say that 2014 is going to be a moderate year for the American auto industry, recent monthly numbers have surpassed expectations. This June, auto sales in the country touched another high, not seen since the financial crises.

Outdoing Expectations

While several industry experts predicted sales volume to drop by a good 3% in June, sales grew by 1.2% to 1.4 million vehicles that brought the seasonally adjusted annualized sales to hit 16.98 million units. According to Autodata Corp., the annualized figure is the best since July 2006.

Many were skeptical about General Motors (GM), which has lately seen several recalls that has brought about some negative publicity. The Detroit automaker recalled as many as 29 million vehicles through June. But the top American automaker thrashed Wall Street expectations and registered 1% sales gain for the month. Reuters expected GM to see 6% sales drop. However, the carmaker did quite well considering expectations. John Krafcik, president of TrueCar.com cited that the recalls didn’t affect GM sales to the extent it was thought as people relate themselves more to the brands such as Chevrolet or Buick, instead of the broader name General Motors.

Second largest U.S. automaker Ford (F) saw a sales plunge of 5% to 222,064 vehicles, but it was better than analyst expectation. Chrysler experienced 9% sales gain to 171,086 vehicles. Foreign automakers also showcased a good performance during the month. Top automaker Toyota (TM) delivered 201,714 cars, up 3% from a year ago month. Nissan’s (NSANY) sales volume went up 5% to 109,643 units. Hyundai-Kia sold 118,051 vehicles, 2% higher than last year comparable period.

Honda (HMC) saw a decline of 6% as demand for its passenger and sports utility car drooped. Volkswagen (VLKAY) suffered a severe plunge of 22% primarily because the German automaker lacked a new offering amid growing competition.

An Upbeat Mood

Improvement in the economic outlook reflected in the consumer confidence who continued buying cars. In addition, lower finance cost triggered further sales during the month. Demand has also been aided by the aging fleet that needs replacement. The upbeat mood in the last month of the first half of the year allayed all fears regarding a soft year. Another point to be noted is that June had two lesser selling days compared to last year’s. So the numbers look even better after the observation.

The industry is now set for a strong second half. Total auto sales in the first half of the year stood at 8.2 million, and with a stronger second half, 2014 could be yet another fantastic year for the automakers. Industry experts have now become quite optimistic about the rest of the year and say that 2014 sales are on track to record sales of more than 16 million cars.

Parting Thought

2014 got off to a bumpy start with moderate January and February sales which fell short of expectations – thanks to the severe winters that prevented people from moving out of their homes. But sales started picking up steam from March onwards, and there on the journey’s been quite exciting for the automakers. In fact May sales saw an extraordinary growth of 12%. The momentum seems to be continuing. With new launches, lower interest rates, and the festive season in the second half of the year, 2014 should be another good year for industry giants.

About the author:

Quick Pen
A seasonal writer with a Management Degree in Finance and interests in automotive, technology, telecommunication and aerospace sectors.

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