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Title: Auto Sales Rise Puts U.S. on Pace to Best Year Since 2007
Source:
Bloomberg
URL Source: http://www.bloomberg.com/news/2012- ... e-to-best-year-since-2007.html
Published: May 10, 2012
Author: Jeff Green and Craig Trudell
Post Date: 2012-05-10 11:20:07 by Brian S
Keywords: None
Views: 1387
Comments: 1
U.S. auto sales are on pace for the best showing since 2007 and a third straight year of at least 10 percent gains, only the fourth such streak since the Great Depression, as more-confident buyers return to showrooms. Automakers are adding overnight shifts and cutting workers’ vacations to meet demand. Sales this year may reach 14.3 million cars and light trucks, equal to the first-quarter pace, according to estimates from 14 analysts compiled by Bloomberg. It would be the best full year since 16.1 million in 2007. The same analysts in January were expecting sales this year of 13.6 million before Toyota Motor Corp. (7203) and others exceeded projections. “Even if we stay where we are, it’s a pretty good year,” said Brian Johnson, an industry analyst at Barclays Capital in Chicago, who is predicting full-year U.S. sales of 14.4 million. Pent-up demand, an improving economy and loosening credit has spurred the better-than-estimated auto sales and helped General Motors Co. (GM), Ford Motor Co. (F) and Chrysler Group LLC to first quarter profits that beat analysts’ forecasts even while deliveries fell in Europe. First-quarter deliveries in the U.S. ran at the strongest pace since the same months in 2008, when sales started at an annualized rate of 15.4 million before collapsing to a full-year tally of 13.2 million, said Kevin Tynan, a Bloomberg Industries analyst based in Skillman, New Jersey. Sales in the U.S. fell to 10.4 million in 2009, the lowest since the end of the 1982 recession. They improved to 11.6 million in 2010 and 12.8 million last year. “Part of the renaissance is related to the depths of the downturn” that led to the bankruptcies of GM and Chrysler, said Matt Stover, an industry analyst at Guggenheim Partners in New York. “There is pent-up demand and the cyclical indicators, while still weak, are grudgingly positive and improving.” The first quarter also benefited from mild weather and a “rocking” equity market, Stover said. The Dow Jones Industrial Average rose 8.1 percent and the Standard & Poor’s 500 Index gained 12 percent in the first three months of the year. Auto sales in the U.S. increased 10.3 percent through April, matching the previous year’s gain after an 11.1 percent jump in 2010, according to Autodata Corp. in Woodcliff Lake, New Jersey. The last time auto sales rose more than 10 percent for three or more years was 1971 to 1973, after an 11-month recession, according to data compiled by trade magazine Automotive News. Previous streaks followed the Great Depression and the World War II production halt, according to the data. GM, Toyota and Ford all have increased their forecasts for full-year industry sales. GM and Toyota see light-vehicle deliveries rising to as much as 14.5 million, while Ford has raised its outlook to as much as 15 million sales including medium- and heavy-duty trucks. The low end of the automakers’ previous forecasts was about 13.5 million units. The higher demand is spurring more shipping of raw materials on the Great Lakes and helping lift rail transport of motor vehicles and parts to the highest level since June 2008. Twenty auto plants will operate with three shifts or three crews of workers by the end of this year in North America, said Tracy Handler, an IHS Automotive analyst based in Northville, Michigan. Only four or five factories may have operated on that basis in 2009, she said in an e-mail. Stronger-than-estimated demand means U.S. automakers are curtailing annual shutdowns usually scheduled at their assembly plants in the summer months. The breaks have been used in the past for maintenance, renovations, tooling changes and preparations for new model-year vehicles. Four Chrysler plants in Illinois, Detroit, Ohio and Mexico will skip summer shutdown entirely this year, the company said in a May 2 statement. Two Chrysler plants and 13 Ford factories are shutting down for just one week instead of two. The changes mean additional output of models spanning automakers’ lineups, from Fiat 500 small cars to Ford Explorer and Jeep Grand Cherokee sport-utility vehicles to Ford F-150 and Ram 1500 pickups. Ford is adding third crews of workers at three factories in Michigan, Illinois and Kentucky and a second shift in its Missouri assembly plant by the third quarter. Those moves will boost production capacity by 400,000 units to 3 million vehicles on an annualized basis, the company has said. Chrysler’s Jefferson North Assembly plant in Detroit, which builds Grand Cherokee and Dodge Durango SUVs, is adding a third crew and 1,100 jobs in November instead of early 2013, Chief Executive Officer Sergio Marchionne told reporters on April 30. Honda Motor Co.’s East Liberty, Ohio, factory has added overtime production to meet demand for the new CR-V sport- utility vehicle, Ed Miller, a spokesman, said in a phone interview. Toyota said this week that in August it will increase production of four-cylinder engines at its Georgetown, Kentucky, plant that supplies models such as the Camry sedan and RAV4 SUV. That follows output boosts announced since February to factories in Ontario, West Virginia and Indiana for assembling RAV4 and Highlander SUVs and six-speed transmissions. The biggest threat to continued gains this year may be the anemic growth in income because some of the strength of sales comes from buyers’ willingness to reduce savings, Guggenheim’s Stover said. The 12-month moving average for per capita disposable income was up only about 0.2 percent through March, according to the U.S. Bureau of Economic Analysis. “The issue right now is the strength of sales: Are they that durable?” Stover said. “But the likelihood of 14.1 million or above is pretty probable unless we run into a big air pocket.” For now, consumers are showing resilience. Even with gasoline rising to $3.94 a gallon in early April from $3.28 in January, sales of profitable light trucks have risen. Chrysler was the biggest gainer in full-size trucks as Ram pickup sales rose 26 percent to 88,590, according to Autodata. “There was hardly anyone you could talk to three years ago that wasn’t worried sick about whether or not they were going to have a job the next month,” Fred Diaz, president of Chrysler’s Ram truck brand, said yesterday in an interview. “Maybe the economy isn’t on this incredible rebound, but there are a lot more Americans that feel like they are stable and not in jeopardy of losing their job,” he said. “So they’re not afraid to make a purchase that they need or want.”
Rebounding From Depths
Companies Boost Forecasts
Chrysler, Ford Factories
Honda, Toyota Moves
Resilient Consumers
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#1. To: Brian S (#0)
What bullshit. It wasn't enough to bury subprime people in McMansions... Now the banks are financing sub- Sub-prime "borrowers" in cars which they can't afford, to pay back money which they don't have! Like Krugman said in 2002, all we need is a BIGGER bubble to replace the last one! This article is pure PROPAGANDA. We're in *serious* trouble, and you're pushing feel-good LIES. You do Goebbels proud.
LoonyMing: I brandish my ignorance like a crucifix at vampires. 'It's now very common to hear people say, "I'm rather offended by that", as if that gives them certain rights. It's no more than a whine. It has no meaning, it has no purpose, it has no reason to be respected as a phrase. "I'm offended by that." Well, so fucking what?' —Stephen Fry
Auto Sales Rise Puts U.S. on Pace to Best Year Since 2007
The economy is wonderful!
Re-elect Obama, he'll pay your rent!
A chicken in every pot!
-Baghdad Bri-bri-
Translation: IGNORANCE IS STRENGTH
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