Bloomberg reports this morning that retail sales for the auto industry are likely to fall short of the pace set in the first half of 2011. Consensus expectations target light vehicle deliveries of 11.9 million seasonally adjusted annual rate, significantly below the average annual rate of 12.5 million for the first six months of the year. The industry had been hoping for a strong sales year as the economy peeked out of the recent downturn, though neither of those expectations have materialized thus far. Auto sales are still well below their 2000-2007 pre-recession average of 16.8 million in annual sales. Auto consultants blame a high unemployment mark, slower than expected recovery, and poor consumer confidence as reasons the industry whiffed in the month of July.
Ford Motor Co. (NYSE:F) issued a recent statement, saying it would not alter its sales expectations for the fiscal year due to the weak month, but noted that it was on pace to finish towards the lower end of its sales range (13-13.5 million). “We probably feel closer to the bottom end of that.” Japanese car makers Toyota (NYSE:TM), Honda (NYSE:HMC), and Nissan are all expected to endure a brutal month as their supply chains have recovered more slowly than expected from the earthquake. A Toyota VP commented, “Our market share will begin recovering this month, but it will be September or maybe October before we’re really growing again. We were in too deep a hole, and we’re still digging out.”
General Motors Co. (NYSE:GM) and Ford also report that supply shortages have also stunted its sales efforts in recent months, “We honestly couldn’t follow up the increased demand for small cars during the second quarter because we are flat out on Fiesta, and we are flat out on Focus,” said a Ford spokesperson.
Last year light vehicle sales rose to 11.6 million from a 27-year low of 10.4 million in 2009. The projected sales swing this year, to as high as 13 million annual rate, was red flagged early on by some analysts. JP Morgan’s (NYSE:JPM) Himanshu Patel wrote, “[the industry growth is] rapid and surprisingly unaccompanied by major labor market improvement…It would be quite uncharacteristic for the next 3 million units (or even the next 1-2 million) to occur” without some macroeconomic change.