Better Than June, July Sales Still DisappointBy Michelle Krebs August 2, 2011
U.S. vehicle sales in July are coming in higher than those in June, but remain disappointing as the economy and the auto industry is not where car companies and analysts expected it would be at this point. Based on early reporting by some automakers, it appears Julys Seasonally Adjusted Annual Rate (SAAR) of sales will come in at about 12.2 to 12.3 million vehicles. Edmunds.coms official forecast is for a 12.3 million SAAR. That would be roughly flat with July 2010 but up from Junes disappointing 11.4 million.
The industry ran into severe headwinds, noted General Motors top sales analyst Don Johnson in the companys call with media and analysts Tuesday. The list of headwinds was long: slow economic growth; high gas prices; stalled consumer spending; rancorous debate in Washington over the debt ceiling; a stubbornly weak job market; and, most importantly, the March 11 earthquake in Japan that disrupted vehicle production and constrained inventories.
For the moment, most automakers are taking solace in the fact that their sales are at least ahead of last year. GM reported a 7.6-percent increase in sales from a year ago, with its fuel-sipping Chevrolet Cruze again surpassing the 20,000 sales mark for the fourth straight month. Chrysler sales soared 20 percent from a year ago, thanks mostly to another strong performance from its Jeep division. Ford sales rose 5.9 percent with Lincoln posting a gain from the MKZ and the Ford Escape having its best month in its entire 11-year history.
"The industry looks as if it will come in at a 12.2 million SAAR in July, and that's a 600,000 unit improvement compared with June. That alone is a real positive," said Ken Czubay, Ford vice president of marketing, sales and service. "Equally powerful, the retail customer made a bigger contribution to the total retail result in July compared with June,"
South Korean automakers continued to take advantage of the Japanese automakers woes. On the strength of the new Accent and Sonata, Hyundai had its best July ever with sales up 10 percent from a year ago. Led by the Sorento (above), Kia posted its best July sales ever, which bettered last Julys by 20.3 percent. Japanese automakers, working to replenish inventory from production disruptions from this springs earthquake, are still struggling. Toyota sales fell 19.7 percent. Even worse, Honda sales plunged 28.4 percent from a year ago. Nissan sales rose a scant 2.7 percent.
A tough battle for a pie that shrunk in July brewed in the luxury segment. The category had been running at around 11.2 percent of the total industry but apparently slipped as much as a percentage point or so despite heavy incentives offered by German automakers BMW and Mercedes-Benz who are vying for the U.S. luxury sales crown this year. BMW had been winning that race, but Mercedes appears determined to overtake its rival.