Auto sales slow as US eases from max level

Bloomberg

Automakers reported lower US sales for October, reinforcing the idea
the market may have plateaued at
a healthy level that still supports the US economy.
The companies faced a difficult comparison to the year-earlier month, which was the best of 2015 and had two more sales days. Sales fell 4.4 percent to 1.39 million vehicles in October, Autodata Corp. reported on its website, after including an estimate for Ford Motor Co.’s results expected later this week.
The largest automakers, including General Motors Co., Toyota Motor Corp. and Fiat Chrysler Automobiles NV, all declined.
October’s results help explain why investors have lost enthusiasm for automakers’ shares, even with the possibility still in play that 2016 could mark a record seventh straight year of sales gains. While pickup and sport utility vehicle demand remains strong enough to keep the companies making money, it will be hard for most to wring out better earnings.
“It’s getting tougher to sell cars, but it’s still a pretty good market,” Michelle Krebs, an analyst with Cox Automotive’s Autotrader, said in an interview. “It’s just taking more money to push the sales.”
Not all the news was bad. GM topped the average estimate in a Bloomberg survey of 11 analysts, dropping just 1.7 percent instead of the 6.9 percent predicted.
Ford’s missing sales report, delayed because of a fire this week at the company’s headquarters, produced some discrepancy in calculations of October’s seasonally adjusted annualized sales rate. Autodata pegged the SAAR at 18.3 million vehicles, the highest since before the recession and bankruptcies of GM and Chrysler, while Wards Automotive Group estimated 17.9 million.
The difference comes down to the research groups’ estimates for Ford. An analysis on Autodata’s website estimates that Ford sales decreased 2.3 percent, which would be far better than any analyst’s prediction. The Ford average in the Bloomberg survey was for an 11 percent plunge, and the most optimistic was for a 9 percent drop. Wards in its SAAR estimate projects a 12 percent drop for Ford. The year-earlier rate was 18.2 million vehicles, and the average estimate in the survey was 17.7 million. Shares of GM, Ford and Fiat Chrysler all fell 1.1 percent or less.
ADDED INCENTIVES
Automakers are dialing up the deals as the market slows. Sales gains by GM’s large SUVs were aided by higher incentives, Krebs said. GM also added “hefty rebates” on its Silverado pickup to win back sales it lost in September to Fiat Chrysler’s Ram, said Brad Korner, general manager of AIS Rebates.
“Incentives have increased dramatically across the board, and in particular in those segments that are under severe pressure,” Joe Eberhardt, who runs Jaguar Land Rover North America operations for Tata Motors
Ltd., said in an interview last week. “In the luxury segment, that’s cars and sports cars.”
Low fuel prices have propelled sales of trucks and SUVs, which
accounted for almost 60 percent
of US sales this year through September. Those favorable prices are
threatened by a fatal explosion in Alabama that shut the largest fuel pipeline in the US, sending gasoline
in New York soaring the most in nearly eight years.