U.S. auto sales strengthened a year after bankruptcies began to batter the auto industry, with Chrysler Group LLC forecast to post its biggest monthly gain since 2005.
Industrywide deliveries in April may have risen to an annualized rate of 11.4 million light vehicles, the average of 8 analysts’ estimates compiled by Bloomberg, compared with a year earlier. Chrysler, which entered Chapter 11 on April 30, 2009, before emerging controlled by Turin, Italy-based Fiat SpA, may have climbed 15 percent, 6 projections show.
The yearly rate of domestic sales in April may be less than the 11.8 million seasonally adjusted annualized pace in March, when Toyota Motor Corp. offered its biggest incentives to counter global recalls, spurring competitors to add discounts.
“The automotive industry is in full-blown recovery,” said Jesse Toprak, vice president of industry trends and insight for TrueCar.com in Santa Monica, California. “Toyota’s generous incentives in April continue to bring consumers back into dealerships; however, the impact of its incentive programs in the marketplace appears to have diminished slightly in April.”
General Motors Co., which entered bankruptcy on June 1, and emerged in July, may post a 7.2 percent increase when industry sales are announced on May 3, while Dearborn, Michigan-based Ford Motor Co. may report a jump of 28 percent. Chrysler’s last double-digit increase was 27 percent in July 2005 when the Auburn Hills, Michigan-based carmaker was part of DaimlerChrysler AG.
Zero-Percent Financing
Asia-based automakers also benefited from incentives. Toyota sales may have risen 34 percent, the average of 5 analysts. The Toyota City, Japan-based automaker extended the no-interest loans and discount leases it offered in April, and competitors followed.
Honda Motor Co., Japan’s second-largest automaker after Toyota, may say sales rose 15 percent, the average of 4 analysts, while No. 3 Nissan Motor Co. may have a 57 percent gain. Seoul-based Hyundai Motor Co. may increase 35 percent, according to Santa Monica, California-based Edmunds.com.
“Honda sales in April got a boost from the uncharacteristically large offers it made available to prospective buyers, including zero-percent financing,” said Brian Johnson, a Barclays Capital analyst in Chicago.
Manufacturers, dealers and investors use the annualized rate to account for seasonal buying patterns when comparing monthly totals. The average estimate for an industry sales pace of 11.4 million vehicles would be a 23 percent increase from the 9.3 million of a year earlier, according to Autodata Corp.
Consumer Confidence Climbs
Automakers were buoyed by consumer confidence that rose in April to its highest since September 2008, as measured by the Conference Board’s monthly index.
“U.S. industry sales of light vehicles appear to have slowed down in April from the 11.8 million level achieved last month, as the initial boost from the large incentives offered since March by manufacturers across the board tapered off, and as automakers likely sold fewer cars to fleet customers,” Johnson said in an April 28 note to investors.
Ford fell 56 cents, or 4.1 percent, to close at $13.02 yesterday in New York Stock Exchange composite trading. Toyota’s American depositary receipts, each worth 2 ordinary shares, dropped $1.02, or 1.3 percent, to $77.09. Ford has gained 30 percent in 2010, and Toyota’s ADRs have declined 8.4 percent.
‘Feeling Better’
Toyota began offering incentives on March 2 such as subsidized leases after worldwide recalls of more than 8 million vehicles to fix defects linked to unintended acceleration and to adjust brakes. The company probably spent an average $2,416 on incentives on each vehicle last month, according to forecaster TrueCar.com.
The industry average is about $2,798, TrueCar.com said. Incentives are down 4 percent from March 2009, when Detroit- based GM and Chrysler boosted spending ahead of their bankruptcy filings.
John McEleney, who has a Toyota and a Buick, GMC and Cadillac dealership in Clinton, Iowa, said sales were up 30 percent at his Toyota store and increased about 20 percent among his GM brands.
“Sales were really pretty good, but not quite as good as March,” McEleney said, adding that sales may keep gaining this year. “We’re seeing a lot more showroom traffic and a lot more Internet activity. People are feeling better about their jobs, too.”
The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from March 2009. Forecasts for the seasonally adjusted annual rate, or SAAR, are in millions of vehicles.
April had 26 selling days, the same as a year earlier.
GM Ford Chrysler SAAR
Rod Lache 4% 25% 22% 11.3
(Deutsche Bank)
Jesse Toprak 3.4% 32.1% 11% 11.5
(TrueCar.com)
Joseph Barker NA NA NA 11.3
(CSM Worldwide)
Jessica Caldwell 4.1% 26% 19% 11.2
(Edmunds.com)
Jeff Schuster NA NA NA 11.5
(J.D. Power)
Christopher Hopson 13% 17% 9% 11.2
(IHS Global Insight)
Himanshu Patel 14% 36% 20% 11.9
(JPMorgan)
Brian Johnson 5% 30% 11% 11.4
(Barclays Capital)
Average 7.2% 28% 15% 11.4
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