January 2010 US Auto Sales Analysis

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Tag: GM, Ford, Chrysler, Hyundai, Honda, Toyota, Nissan, January 2010, US Auto sales, SAAR, Housing Starts, Construction, leasing, fleet, sudden acceleration, recalls, throttle sticking 

February 7, 2010

Auto sales in January were up 6% compared to last year’s dismal performance (Table A below).  January is typically a down month for volume because of the end of year incentive programs in manufacturers offer in December.  The seasonally adjusted sales volume (SAAR) for the month was 10.5 million vehicles, down from 11.9 million in December (Figure 1).  In January 2009 the SAAR was 9.8 million vehicles.  Overall, the industry’s performance was mixed depending on the manufacturer.

Figure 1: Seasonally Adjusted Annual Sales Rate by Month - Click to enlarge

The biggest year-over-year gains from the large manufacturers were made by Ford, GM, Hyundai and Nissan.  For Ford and GM, January 2009 was a bad month as sales to fleet customer dried up along with credit as the financial crisis continued to unfold.  In an article written last year assessing January 2009’s US sales, The Automotive Lyceum wrote:

GM, Ford and Chrysler saw sales fall 49%, 42 and 55% respectively for the month.  However, much of the decrease at the Detroit 3 can be attributed to sharp declines in fleet sales.  Fleet sales fell sharply because of lack of credit and overall demand.  Fleet sales generally are low margin or no margin sales.  GM and Chrysler stated they experienced an 80% reduction in fleet sales for the month with Ford’s dropping 65%.  All three companies reported that their retail sales drop were in line with the industry average.  GM, Ford and Chrysler’s retail sales dropped, 38%, 27% and 35% respectively.  With the overall US industry down 37%, the Detroit 3’s sales declines look reasonable and in the case of Ford encouraging.

Fleet sales at both GM and Ford increased from last year.  Specifically, Ford's fleet sales jumped 154%.   GM's did not publish their percentage increase but it is likely around 100%.  As a percentage of sales both Ford and GM's fleet deliveries were 37% and 29% respectively.  The sharp increase in fleet sales made up most of the gains at Ford and this continues to be a concern.  GM’s fleet sales were up from December but the company appears to be showing discipline to maintain a fleet percentage of 25% on average.  Table 1 illustrates the impact fleet sales have on overall sales at the company and indicate the true market acceptance of a company’s product.  Factoring out sales to fleet, troubled Toyota out performed Ford with real retail buyers. 

Total  Retail
GM 146,315 103,883
Ford 116,277 73,254
Toyota 98,796 88,916

 Table 1: Retail Sale Estimates

Hyundai and Nissan sales were up 13 and 16% respectively.  Nissan’s sales were likely driven by increased incentive spending.  Hyundai’s sales continue to driven by increased rental fleet penetration.  Honda’s sales were down 5% and is believed the company’s performance is good indication of real retail demand.  Historically, Honda does not sell many vehicles to fleet customers and is generally under 5% of total US sales deliveries.   Honda’s also does not heavily incentivize their product, therefore the company's sales performance is a good reflection of the mood of the retail customer.

Chrysler’s performance continues to be a concern as sales declined 8% year-over-year to (57,154 deliveries).  Compared to December 2009 (86,523 deliveries), sales were down 34%.  The company continues to provide little if any guidance on its fleet-retail mix.  It is known Chrysler did fleet approximately 50% of all deliveries in December 2009 and it is highly unlikely the company maintained that same level in January.  All things being equal, on a high level the company’s sales results were in line with Honda’s, however, it can be assumed Chrysler fleeted approximately 30% of its volume.  

The most anticipated results were Toyota’s following the public controversy relating to the safety of their vehicles following allegations and recalls related to sudden acceleration.  For the month, Toyota sales fell 16% to under 100,000 vehicles.  The poor showing in the month has been blamed on the bad publicity related to allegations of fatal crashes related to sudden acceleration resulting in recalls and a stop sale of high volume product.  However, it appears from a review of the company’s sales results, January was going to be a poor month before the stop sales was issued on the following vehicles:

• Toyota Motor Manufacturing, Canada (Corolla, Matrix, and RAV4)
• Toyota Motor Manufacturing, Indiana (Sequoia and Highlander)
• Toyota Motor Manufacturing, Kentucky – Line 1 (Camry and Avalon)
• Subaru of Indiana Automotive, Inc. (Camry)
• Toyota Motor Manufacturing, Texas (Tundra)

To blame the magnitude of the drop in sales because of the stop sale does not fit with the timing of the event.  Toyota first issued the recall on the throttle sticking problem on January 21st  yet the company does not suspend sales on the recalled vehicles until January 26th.  Because of the stop sale the company lost only four or five selling days out of a total of 24 for the month.  

The vehicles that were involved in the stop sale because of the sticking accelerator recall saw their sales drop almost 18% (Table 2).  However, subtracting out the non-stop sale vehicle, Toyota’s corporate sales including Lexus and Scion were down 12%.  The data suggests that the stop sales did not contribute significantly to the overall sales drop for the month.  

Jan-10 Jan-09 %
Sales of Vehicles Involved in Stop Sale 53,231 64,589 -17.6
Non-Involved Vehicles 46,748 53,062 -11.9
Table 2: Impact of Stop Sale (Source Toyota Sales Press Release)

Toyota’s assertion that the company lost 20,000 sales because of the stop sale is not supported by the sales data.  It is estimated that sales would have been down around 10% or 12,000 vehicles without the stop sale.  The stop sale began late in the month and assuming a constant sales rate per selling day the impact should have been reasonable limited. It would appear the constant bad press coverage the company has received since late summer may be a factor as potential customer are beginning shy away from the Toyota brand. Independent of the stop sale it appears that January would have been a bad month for the company.

The bad press will also hurt the resale value of their product and that may hurt future demand.  In recent months Toyota has been using leasing as a means to make vehicles more affordable and drive sales.  This crisis should put a damper on that program as the company’s high residual values begin to drop and reduce leasing as a means to deliver product as it becomes more expensive for the company to subsidize.  Kelley Blue Book just announced it is lowering the used-vehicle values of recalled vehicles 1 to 3%.

US Market Analysis

Ken Czubay, Ford's sales boss stated:

"Higher fleet volume is an early indicator of future retail sales."

This site continues to prefer to rely on the relationship between the sales of fullsize pickup trucks and new housing starts as a better indication of the future prospects of retail sales.   One simple reason is the data is cleaner and specifically pickup trucks are generally used for commercial purposes.  It will be added that pickup truck sales only make up a small component of total fleet sales with traditional passenger vehicles sold to rental fleets dominate the mix..  For that reason, Ken Czubay’s statements are oversimplify. 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 last year.  Pickup sales are more volatile because of the impact of incentive spending to move the product but for the most part remain relatively flat since the end of the first quarter last year.  After recovering slightly from May lows, housing starts also continues to remain flat.  This analysis suggests that retail auto sales will continue to be depressed going forward.  In conclusion, based on current trends total US auto sales for 2010 should come in at around 11 million vehicles as the US economic recovery remains weak.

Figure 2: Fullsize Pickup Truck Sales and New Home Construction - Click to enlarge (Housing data)


Automaker Jan. 2010 Jan. 2009 % Change
BMW 15,439 14,344 8%
Chrysler 57,143 62,157 –8%
Daimler 15,447 12,223 26%
Ford 116,277 93,044 25%
GM 146,315 128,198 14%
Honda 67,479 71,031 –5%
Hyundai Group 52,626 46,608 13%
Isuzu 165 –100%
Jaguar Land Rover 25,89 2,657 –3%
Maserati 101 96 5%
Mazda 15,694 15,420 2%
Mitsubishi 4,170 4,730 –12%
Nissan 62,572 53,884 16%
Porsche 1,786 1,658 8%
Subaru 15,611 12,194 28%
Suzuki 2,040 3,650 –44%
Toyota 98,796 117,287 –16%
VW 24,614 17,559 4%
Other 291 304 –4%
TOTAL 698,990 657,209 6%

Table A: January 2010 US Auto Sales (Compiled by Automotive News)

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