2010 US Automotive Sales Recap

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January 21, 2011

Auto sales in the US continue to be depressed when compared to the level prior to the financial collapse in September 2008.  In 2010, automakers sold 11.5 million vehicles in the US (Table 1), up 11% from 2009.  The sales pace remains weak as sales in the US were averaging about 16 million a year before the onset of the recession.

Generally most of the major automakers saw double digit gains with the exception of GM, Toyota and Honda.   After shedding Pontiac, Saturn, Hummer and Saab during its 2009 bankruptcy, GM still retains its position as the US largest automakers with just over 19% of market share.  Based upon the strength of its new crossovers, sales were up 7% for the year.   The number two spot was taken over by Ford as sales increased  17%.   Toyota dropped to number three as sales were flat after a year of trouble and negative publicity related to recalls, quality concerns and US Congressional hearings over allegations of unintended acceleration.

The largest gains were made by Subaru, VW and Hyundai as sales improved over 20%.  Hyundai Group with its Hyundai and Kia brands has been launching redesigned mode and filling voids in the portfolio which have been well received in the market.  VW’s gains have centered on adding product at its Audi brand such as the Q5 crossover and redesigning the VW Jetta to be cheaper and appeal to a wider audience.   Subaru throughout the recession remained a hot brand and continues to make solid gains in the market as it updates models.

Post bankruptcy Chrysler saw sales gains of 17% for the year.  It the second half of 2010, the Ram pickup and new Jeep Grand Cherokee drove growth as sales were strong.  However, in the first half of the year (Table 2), 39% of Chrysler Group’s sales went to fleet.  Retail demand for core product at Chrysler remains very weak and this remains a concern until the new product designed under Fiat’s supervision is released.  Chrysler is set to release a number of lackluster refreshed product that are expected to hold them over until that happens.  Their only near term significant products to launch are the redesigned Chrysler 300, Dodge Durang and Dodge Charger  which are large, rear wheel drive vehicles and entering the market as fuel costs are rising.

It should be noted that for the first half of 2010, fleet sales accounted for 35% of Ford and 31% of GM's volume.  Hyundai and Nissan also resorted to fleets to move product.  What this says about the market conditions is that retail sales remain relatively weak in the US.

Sales in the US are improving (Figure 1) with what appears to be some end of year momentum when compared to the lows in the winter of 2009.  The sales rate (SAAR) was 13.1 million vehicles in December, as it steadly improved throughout the year.  Looking at the data on a macro level, the auto market is certainly not showing a "V" shaped recovery and though improving will not attain pre-recession levels for a few years. 


Figure 1: 2005 through 2010 SAAR by Month (Click to enlarge)
 
To better understand future trends in auto sales this site continues to prefer to rely on the relationship between the sales of fullsize pickup trucks and new housing starts as an indication of the future prospects of the retail market.   The relationship between fullsize pickup truck sales and new home construction have been shown to provide insight into the retail side of the business.  As pickup sales increase with new home starts, improvement in retails sales will generally follow.  The relationship between pickup truck sales and housing starts was reanalyzed given additional data to estimate directional trends in the market.  For additional information on the model see: "A Going Concern" – The Global Auto Industry.

As Figure 2 illustrates, pickup truck sales continue to follow closely with new home construction.  Both pickup truck sales and housing starts bottomed out early in 2009.  Pickup sales are more volatile because of the impact of incentive spending to move the product as is shown specifically by December's results.  There appears to be a slight disconnect between pickup sales and housing in the second half of 2010.  That is likely a result of stimulus spending by the government on infrustructure and improvements in the agriculture sector of the market.   However, after recovering slightly from low in May 2009, housing starts continue to remain flat.  This analysis suggests that retail auto sales will continue to be depressed going forward. Based upon the current trends total US auto sales for 2011 should continue to improve with overall sales for the year coming in around 12.2 to 12.7 million vehicles.
 
Auto financing continues to remain tight.  Prior to the recession, vehicle sales to subprime borrowers made up approximately 20% of the market.  As of November it was at 5.6%. Furthermore, GM and likely Chrysler because of a lack of a captured finance unit have reduced their retail lease sales.  Leasing accounts for slightly greater than 20% of all retail sales however leasing accounts for 15% of sales at GM (GM 8-K).  Financing for autos though improving continues to be tight especially for those with less than worthy credit ratings.  But if credit does loosen for the subprime market, sales demand could improve appreciably.  If credit were to loosen to pre-recession rates, auto sales next year could reach close to 14 million vehicles, however unlikely that is.
 
Futhermore, automakers and suppliers have significantly cut capacity including both their footprint as well as head count.  One caveat is, if retail demand begins to pick up quicker than expected, it will take months for the companies to ramp up to the new demand level.  The industry will have to retool for the additional capacity which has a long lead time and just as important, workers will have to be trained.
 
Baring any unexpected economic surprises, 2011 should be much like 2010 except that auto sales should continue to improve and muddle along as it has been.   
 

Figure 2: Housing Starts Vs. Fullsize Pickup Truck Sales (Click to enlarge)
References:

 

 References:

  • Automakers rack up solid gains to finish 2010 on a high note, Automotive News, January 2011
  • Fleets fuel surge at GM, Chrysler, Automotive News, August 2010
  • Edmunds: Subprime borrowing for new cars drops in November, Dow Jones Newswires, December 2010
  • GM SEC 8-K, Filed January 12, 2011

 

 Automaker    12 month 2010    12 month 2009    Pct. chng.   Pct. Market Share
 General Motors 2,211,699 2,071,749 7
19.1
 Ford Motor Co. 1,964,059 1,677,234 17 16.9
 Toyota 1,763,595 1,770,147 0 15.2
 American Honda  1,230,480 1,150,784 7 10.6
 Chrysler Group LLC   1,085,211 931,402 17 9.4
 Nissan 908,570 770,103 18 7.8
 Hyundai Group 894,496 735,127 22 7.7
 Volkswagen 359,889 297,537 21 3.1
 BMW Group 266,069 242,053 1 2.3
 Subaru   263,820 216,652 22 2.3
 Daimler AG 230,934 205,199 13 1.9
 Mazda   229,566 207,767 11 1.9
 Mitsubishi   55,683 53,986 3 0.5
 Jaguar Land Rover   45,204 38,261 18 0.4
 Porsche   25,320 19,696 29 0.2
 Suzuki   23,994 38,695 -38 0.2
 Volvo Cars North America  21,423 x x 0.2
 Saab Cars North America 4,837 x x 0.04
 Other (estimate)   3,528 3,680 -4 0.03
 Maserati   1,897 1,273 49 0.01
 Isuzu   x 165 x x
 TOTAL   11,590,274 10,431,510 11 100

 Table 1: 2010 US Auto Sales (Source Automotive News)

 

 Automaker   Pct.  of Sales
Chrysler Group 39
Ford Motor Co. 35
General Motors 31
Hyundai brand 16
Nissan  15
Toyota 9
American Honda 2

 Table 2 US Fleet Sales by Company January through July 2010

 

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