By on June 30, 2011

The US market’s Seasonally Adjusted Annual Selling Rate (SAAR) hurdled the 12m mark towards the end of last year, and was cruising above the 13m mark for much of the first half of 2011, but after a rough May, June seems set to become the market’s second month back under the 12m mark.

Not every analyst agrees with Edmunds’ sub-12m SAAR projection, with some forecasting [via Bloomberg] as high as 12.2m and others guessing as low as 11.8m, but one thing is certain: everyone thinks Detroit will pick up sales compared to their June 2010 numbers, with GM’s pickup predicted to be in the 14-20% range, Chrysler in the 20-30% range and Ford in the 8-15% range. The big losers: Honda and Toyota, both of which are expected to lose sales compared to last June.

Toyota says inventories “bottomed out” in June, and all three of the major Japanese automakers increased incentives noticeably in a play to keep customers, although GM and Chrysler still top TrueCar’s incentive forecast. And, according to Barclays Capital analyst Brian Johnson, low inventory might not be as big of a problem as strong pricing:

Light-vehicle sales ticked up only slightly in June as many potential buyers continued to defer their purchase amid high car prices and limited inventories. Despite some indication last month that Japanese (automakers) were ready to cut prices as post-quake production resumed, pricing has remained strong in June, likely leading many buyers to defer purchases.

The solution then might seem obvious: lower prices. But some fear that something else is playing out in the falling sales. Reuters reports that

Auto sales, to be reported on Friday, are an early indicator of consumer spending each month… some economists, including Peter Morici at the University of Maryland, see signs that a second recession may be “in the wings”

Not so, says Ford economist George Pipas, who tells Bloomberg

Industrywide sales have been hurt by “the lack of availability of some popular products in May, June and probably July” because of the March 11 earthquake and tsunami in Japan, Pipas said. “When they come back on line, we’ll do as well as we did in the first four months of the year, plus we’ll have pent-up demand from people who have been deferring purchases”… The “underlying demand” is for a 13 million sales rate, Pipas said. “The economy is expanding, income is expanding, the population is growing and cars are getting older… The likelihood of a double dip is not even on our radar screen”

But even if the overall market recovers from what Ford and Pipas see as a two-month dip, GM is exhibiting symptoms of another, potentially troubling, industry trend: strong cars sales. Wait, I mean weak truck sales. Reuters reports that Chevrolet’s car sales made up the majority of the brand’s volume for the third month in a row, the first time the bowtie brand has achieved that feat since 1991. Chevy sales boss Alan Batey tells Reuters

We have been a very, very strong trucks brand and frankly have underperformed in cars. It’s as simple as that. You have to go back a long way to see a car performance this strong. Although the cars will remain robust and strong, I expect the trucks will come back somewhat in the second half of the year.

Of course it’s not “as simple as that” though. Batey may only be able to use words like “strong” and robust” to describe car sales, but the view is a little different from the dealer level. The owner of New York’s largest Chevy store tells Bloomberg

June started off briskly but has slowed down. 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.

But, at the end of the day, Ford and GM are picking up sales in the short term… which makes it easier to be optimistic about the longer-term picture. But if trucks sales are slowing, buyers are waiting for Japanese-brand inventories to pick up before buying, and GM and Chrysler still have the highest incentives in the industry, Detroit is not going to make as much hay off the post-tsunami chaos as they probably hoped to. It’s beginning to look like the opportunity to take a few free shots at Toyota and Honda’s US-market dominance may be lost already…

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9 Comments on “June Sales Forecast: Swing Low, Sweet SAAR-iot...”

  • avatar

    Ed writes “It’s beginning to look like the opportunity to take a few free shots at Toyota and Honda’s US-market dominance may be lost already…” and this is true as far as it goes. However the post Tsunami recovery occurred quicker than anyone (including Toyota and Honda) expected.
    Also I haven`t seen an explanation for why Nissan can increases sales consistently whilst Honda and Toyota haven`t – were they not all affected by the Tsunami?

    Surely GM having over 50% of its (increased) sales being from cars is a good thing and shows they are moving into a more sustainable business model (especially with the projected long term increase in gas prices). It is more impressive that GM got more than 50% of their sales from cars when you consider that Pontiac and Saturn, which were predominately car only brands, were eliminated in the last couple of years and took their car sales with them.

    • 0 avatar

      @Mike978: You bring up an interesting point about the Nissan sales increases, although I have seen posts on here and other blogs that Nissan cranked up incentives during March/April/May. Japan is recovering much quicker than first thought, but it doesn’t surprise me. Anytime there’s a huge natural disaster, the speculation on time of recovery is much more pessimistic than the actual results. Although, New Orleans may make a liar out of me…

      Although I work in the printing industry, we’ve been flat for the last two months. Previous to May, we followed the rest of the economy, which was on the upswiing. I have noticed that it seems like my friends and neighbors are not spending money, for anything right now. I don’t know if everyone has finally succumbed to the shell shock of the last three or so years or not. But, I would tend to agree with the view that there may be a double dip on the way, contrary to what the Ford guy thinks.

      However, GM getting most of it’s sales from cars, I would take to be a positive sign for the company. We’ve been told repeatedly that too many truck sales is a bad thing, and now that it’s turning around (possibly) lesser truck sales are suddenly a bad thing?

      Just because one dealer in NY (NYC? Buffalo? Schenectady? Where?) says his SUV/Truck sales are off for the month of June does not make a trend. It barely rates being in the article, IMO. If they had surveyed across the US and found a downward trend for one month it might mean something. If truck sales are tied to construction starts and no one is starting construction right now, I’m not surprised that sales are down. Could it be that sustained $4/gallon gasoline might have something to do with this too?

      Let’s hope we’re not on the downhill part of the dead cat bounce…

    • 0 avatar

      We should hope that Ford and GM continue to do well. They owe US a whole lot of money. But in reality, I don’t know if a SAAR of under 12M is going to sustain them because that 12M has to be divvied up among all the brands, not just Ford and GM.

      And while Honda and Toyota are indeed down in sales, much of that is beyond their control and Hyundai/Kia have picked up many of the sales that Honda and Toyota could not deliver on. They’re even talking about opening up another factory in the US to double output. No doubt the NLRB and the UAW will try to put an end to that notion, like they’re doing with Boeing in SC.

      With the much publicized refresh of Toyota’s Camry, the question has to be asked, like George B did: How many people ARE holding off until the redesigned 2012 Camry comes on line for delivery?

  • avatar

    Bertel’s recent posts have indicated that Nissan’s production was largely unaffected when compared to what happened to Toyota and Honda. I take it either their plants were geographically spared (relatively), their parts inventories were plentiful, and they’ve been quick to get back on their feet.

    Who couldn’t see that the real winner here would be Hyundai? Import buying Americans will go to a Hyundai before they’ll go back to Ford, GM, or Chrysler. For those who have negative perceptions of the domestics, those feelings tend to run really, really deep and will not go away so easily.

  • avatar
    John Horner

    The industry had better get used to the idea that the US is now a replacement market for automobiles, not a growth market. And, many people who are buying new vehicles are moving down in size classes.

    In cars, Ford and GM are certainly picking up some share from the Japanese. Yes, Hyundai is a big winner of these shifts, but Hyundai has at least as much long memory market baggage to overcome as Ford or Chevrolet do.

    Light truck sales are going to move back towards the long term trend of 20-25% of the total market. That pretty well correlates with the people who actual need a truck or BOF SUV. The 50% share that segment enjoyed for a decade or so was an anomaly brought on by relatively low gas prices, the nuances of CAFE, and a brilliant decade or so of marketing. But, them days are over.

    • 0 avatar

      Hyundais didn’t go on sale in North America until 1986, the domestic manufacturers had been hard at work ruining their reputations for a solid decade or more by then.

      Also, as a result of their former market share far more people got burned by Malaise-era Detroit cars than Hyundais. Most people remember the Hyundais of 25 years ago for being cheap in an abstract sense, because they didn’t actually own one. People remember very clearly the time their Granada/Vega/etc croaked, because it happened to them; sometimes repeatedly.

      Just from what I hear in casual conversation I think there’s significantly more bad feelings for the domestic makes out there than there is for Hyundai.

  • avatar
    George B

    Wonder how many customers wait for a specific new model like the 2012 Toyota Camry redesign?

    • 0 avatar

      I have no hard data to support this but I would expect not many since the “typical” Camry driver just wants A to B transportation and not necessarily the latest thing.

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