June Auto Sales Still Well Below Pre-Earthquake Levels
May auto sales were down as prices climbed and there was a shortage of cars on the market. Now sales are looking to rise only 2% in June, though up a more significant 8% over June 2010 sales figures, as prices remained high and inventory was limited.
According to economists’ forecasts, 12 million vehicles will be sold in 2011 on a seasonally adjusted annualized basis. While that figure is up from 11.1 million last year and up from last month’s estimate of 11.8 million, it is below the average 13.1 million sold on an annualized basis in the first four months of 2011, demonstrating that March’s earthquake, and not the stagnating economy, is most likely to blame for low sales figures, which will hopefully bounce back as affected companies increase production throughout the year. Official auto sales data will be reported Friday, July 1.
Toyota (NYSE:TM) and Honda (NYSE:HMC) sales were both down below June 2010 levels as the supply disruptions after the earthquake drastically reduced production levels. Incentives also continued their decline, leading to disappointing sales for automakers like General Motors (NYSE:GM) and Ford (NYSE:F). Because inventory was lower than demand, automakers thought they could decrease consumer incentives to make larger per-vehicle profits, but that strategy backfired as hurting Japanese automakers Toyota, Honda, and Nissan (PINK:NSANY) increased incentives in May by 9.3%, 4.5%, and 9.8%, respectively, to keep from losing loyal customers.
Despite their efforts, Toyota and Honda sales were both significantly down while GM sales rose 17%, Ford sales were up 11%, and Chrysler (PINK:FIATY) shares were up 26%. Nissan is the best-faring Japanese automaker, with a projected 25% year-over-year rise in sales in June.
As gas prices decline, consumer credit becomes more widely available, and automakers increase production, sales should begin to increase by the end of summer, with figures unlikely to top 13 million vehicles on an annualized basis until August at the earliest. Before the recession hit in 2008, the 10-year average for vehicle sales was 17 million.
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