Analysts: Sales rebound slowed by missing inventory
Fewer deals, economy deter some buyers
Photo credit: BLOOMBERG
DETROIT (Bloomberg) -- U.S. auto sales probably rebounded in June after a slowdown in May, a recovery limited by shortages of vehicles from Toyota Motor Corp. and Honda Motor Co. that led some would-be consumers to put off buying.
June light-vehicle deliveries, to be released Friday, may have run at a 12 million seasonally adjusted annual rate, the average estimate of 12 analysts surveyed by Bloomberg. That would be an increase from 11.8 million in May, when sales set the slowest pace in eight months, according to researcher Autodata Corp.
The pace of new-vehicle retail sales cooled during the third week of June, after exhibiting a stronger pace during the first two weeks of the month, J.D. Power and Associates said today. The company gathers real-time transaction data from more than 8,900 retail franchisees throughout the United States.
The company blamed lower incentives, and tight supplies of new cars and lights trucks, notably small vehicles, for the slowdown in showroom traffic as the month unfolded.
The June retail seasonally adjusted annualized rate is expected to come in below 9.8 million units, but still nearly 500,000 units better than May. The total light-vehicle selling rate is expected to be below 12 million units for the second straight month, J.D. Power said.
Toyota and Honda, having lost production after the 9.0-magnitude earthquake March 11 near Japan, may each report sales declines of 13 percent, while deliveries by U.S. automakers General Motors Co. and Ford Motor Co. may rise at least 12 percent. Persistent unemployment and a depressed housing market are also weighing on new-vehicle demand, analysts said.
"The first issue is still going to be inventory and the lack thereof for Toyota and Honda," said George Magliano, a New York-based economist for IHS Automotive. "The second issue, and it's becoming an annoying issue and a concern until we see it change, is the soft patch in the economy. The housing numbers still stink, and you've got issues with jobs and confidence."
The U.S. unemployment rate rose to 9.1 percent in May. Confidence among U.S. consumers in June fell to a seven-month low, and the percentage of consumers planning to buy a new vehicle within six months fell to 3.1 percent, the lowest since December, the New York based Conference Board said this week.
The percentage of consumers planning to buy a home within six months slid to 3.7 percent, also the lowest since December.
Toyota inventories bottom
Inventories bottomed this month at Toyota, said Bob Carter, group vice president of U.S. sales. Vehicle production at the automaker's North American plants will return to normal in September, Carter said June 16.
Don Mushin, general manager of Toyota of Hollywood near Los Angeles, said this week his dealership had 80 cars on the lot, compared to 350 to 400 in normal times.
"We're losing a little bit of our business to the domestics, or people are on the fence waiting for us to get more inventory," Mushin said in a telephone interview. The dealership had five Prius hybrids, which usually accounts for about half of sales, in stock earlier this week, he said.
Honda, the second-largest Japanese automaker by U.S. sales, forecast a 63 percent decline in full-year profit on June 14, citing output of key models such as the Civic that the company says should normalize by November. The sales declines for Toyota and Honda are the average of four analysts surveyed by Bloomberg.
GM may report an 18 percent increase in deliveries, the average estimate of seven analysts. Paddock Chevrolet in Kenmore, N.Y., the largest Chevrolet store in the state, had a weaker month for truck sales in June than May, owner Duane Paddock said in a telephone interview.
"June started off briskly but has slowed down," Paddock said last week. "Car sales were consistent but our truck business was definitely soft. What is alarming is that we're not seeing the truck and SUV traffic we have been seeing."
Average U.S. gasoline prices dropped 26 consecutive days through June 28 to $3.54 a gallon for regular unleaded, according to AAA. Prices peaked at $3.99 on May 4, the highest level since July 2008.
Sales for Ford may have gained 12 percent, the average estimate of seven analysts. Ford's truck sales may have dropped a second-straight month after 17 consecutive increases, according to auto-pricing Web site Edmunds.com.
Deliveries of smaller cars such as Ford's Fiesta and Focus and GM's Chevrolet Cruze have helped the two manufacturers gain share from competitors, said Jessica Caldwell, a California-based analyst at Edmunds.com.
"The market would be a lot lower overall if we did not have a lot of offerings from the domestic brands that are fuel efficient," Caldwell said in a telephone interview.
Pickup sales are rebounding from market-share lows in April, although they may still lose market share this month from a year earlier, Ford sales analyst George Pipas said Wednesday. Greater availability of models such as the Focus and Fiesta, which have fallen to 20-days supply, will help industry sales rebound in the second half, he said.
Chrysler products improve
Chrysler may lead U.S. automakers with a 26 percent increase in sales, according to the average of five analysts' estimates. The automaker is getting a boost from new models such as the Chrysler 200 and Fiat 500, which starts a national marketing campaign on July 4.
"Their products have improved and the consumer acceptance of those products have been growing at a pace faster than we have anticipated," said Jesse Toprak, vice president of industry trends at TrueCar.com in California.
Nissan Motor Co. may report a 25 percent increase in deliveries for June, the average of four estimates. Nissan may outspend Ford this month on incentives, according to TrueCar.com data.
"They've really been in a deal-oriented state for quite some time," Edmunds' Caldwell said.
Light-vehicle sales climbed to 11.6 million in 2010 from a 27-year low of 10.4 million in 2009. Deliveries still were 31 percent fewer than the 16.8 million annual average from 2000 to 2007, according to Autodata.Contact Automotive News