April U.S. light-vehicle sales will return to January levels on stable retail sales rates and fleet sales that increased from February and March, analysts say.
Six analysts surveyed by Automotive News gave an average seasonally adjusted sales rate of 9.8 million units, the same as Januarys results and down from 14.7 million units in April 2008. Demand fell to 9.1 million units in February, the lowest since December 1981, before increasing to 9.3 million units in March.
Sales of vehicles to individual customers have remained stable from February through April, analysts say. So any increase in demand reflects increased fleet sales, they say.
The market has seemingly formed a bottom, but the timing of a sales pickup is unclear, Rich Kwas, an analyst for Wachovia Capital Markets LLC, said in a research note.
General Motors and Chrysler LLC will suffer declines of more than one-third compared with year-ago levels, analysts said. The companies are operating on $17.4 billion in federal loans.
Ford Motor Co. sales will be down from 27.2 to 33 percent, analysts predicted. Toyota Motor Sales U.S.A.s sales will fall by more than a third, while American Honda Motor Co. and Nissan North America will see drops of about a quarter from April 2008, the analysts said.
A Reuters poll of 36 economists predicted an April sales rate of 9.8 million units.
Analysts are predicting a sales recovery in the second half of the year. And global indicators suggest the economy is contracting less severely and may recover in the second half, Ford senior economist Emily Kolinski Morris told Automotive News on Wednesday. But the unprecedented credit squeeze may prevent that economic recovery, she said.
Do credit conditions come along, and is that the stiff wind that blows out that little flame before it has a chance to start working? she said.
Auto sales tend to be a leading economic indicator, she said, which means their recovery might forecast an end to the 17-month recession. That recovery could come as quickly as the sales dropped, from a 13.9 million sales rate in August to 10.9 million in October.
Because it happened so quickly on the downside, there may be a psychological element as well that may make it return quickly on the upside, she said.
The current floor for the dramatic decline in sales rates, down from the 16.2 million new light vehicles sold in 2007, is a positive for the auto industry. But stabilizing for a time at such a low rate means woes will continue, Barclays Capital analyst Brian Johnson said in a research note.
This tepid selling rate is certainly negative news for the industry and keeps adding pressure to the automakers production schedules and squeezing the whole supply chain, Johnson said.
Automakers had an 83-day supply of U.S. inventory at the end of March, and analysts recommend a 60-day supply.
GM said last week that it would idle 13 of its plants for up to nine weeks this summer, in an attempt to cut second- and third-quarter production by 190,000 units. The automaker wants to cut its inventory from 767,000 units at the end of March to 525,000 by July. That plan is clearly negative for the second-quarter 2009 earnings of GM and its main suppliers, in our view, and dashed hopes that first-quarter 2009 would constitute the bottom for the industry, Barclays Capital analyst Brian Johnson said Wednesday in a research note.