Market Overview

Auto Makers Post Mixed February Sales


In January, harsh weather climates were being blamed for poor auto sales that hammered the Midwest and Northeast regions several times during the month. The auto makers remained optimistic that declining sales are a temporary phenomenon and remained optimistic that consumers will show up to dealers and purchase vehicles in the month.

On Monday, major manufacturers reported their February U.S. sales data.

The “Big Three”

General Motors: Weather to blame

General Motors (NYSE: GM) reported that its unit sales declined 0.9 percent to 222,104 vehicles. The decline is not as steep as the consensus estimate that called for a decline of 7.7 percent.

General Motors blamed the weather that “continued to impact the industry” in February, but General Motors sales “started to thaw” during the Sochi Olympics.

Several General Motors vehicles recorded a positive month. The Chevrolet Sonic, Cruze and Malibu posted double-digit sales increase while deliveries of the new Chevrolet Corvette were up 149 percent.

General Motors estimated that its share of the light-duty pickup segment increased two percentage points from January. Specifically, the mix of light duty pickups powered by General Motors' all-new EcoTec3 V6 increased two percentage points month over month and totaled approximately 20 percent of retail sales.

Looking forward, General Motors is hoping for a successful 2014 driven by the company's expectation for “the strongest GDP growth since the end of the recession.”

Chrysler: No need to blame weather

Chrysler reported that its unit sales rose 11 percent to 154,866 units, beating the consensus estimate that called for a gain of 8.8 percent.

Chrysler noted that the severe cold weather experienced in many parts of the country has been “ideally suited” for its Jeep brand. Appropriately, sales of Jeep vehicles were up 47 percent and the brand had its best February sales ever.

Several Chrysler Group vehicles achieved sales records in February, capping off the company's steak of year-over-year sales gains to 47 consecutive months. The Jeep Compass, Jeep Patriot and Jeep Wrangler each had their best February sales ever. The Chrysler 200 and Dodge Journey also logged their best ever February sales. The Ram pickup truck posted its best February sales in eight years.

Ford: Sales slump more than expected

Ford (NYSE: F) reported that its unit sales fell 6.1 percent to 183,947 vehicles. The decline is worse than the consensus estimate that called for a decline of 5.3 percent.

Ford noted that sales picked up in the final week of the month providing the company “momentum after a slow start to the month.”

Ford Fusion continued to see “strong retail sales performance” in the West, outpacing many competitors in the mid-size sedan segment.

There were some positives in Ford's reports. Sales of F-Series trucks totaled 55,882, making the month Ford's best February for F-series sales in eight years. The Lincoln brand saw sales rise for the fifth straight month.

Fleet sales were partially hurt by weather which delayed a portion of orders. The company expects volume gain to be made up in March.

Dealers felt enticed to offer consumers a larger incentive to drive sales. The average incentive rose five percent to $2,633 per vehicle according to the TrueCar research firm and car-buying website. The incentives were only partially offset by a 3.6 percent rise in average transaction prices.

On average, the automotive industry had an 88-day supply at the beginning of the month, above the 60-day supply which is considered “optimum” for dealerships. Consumers may benefit as the above optimum 88-day supply may hint that dealerships are gearing up offer bigger incentives on vehicles during March.

Investors may or may not buy General Motors and Ford's declining sales as weather related. Chrysler saw strong gains as consumers may have perceived the Jeep brand as offering a superior vehicle to combat harsh driving conditions over the Ford Escape and Explorer, both of which saw declining sales.

February's data on truck sales may offer investors a difficult time in jumping to conclusions as to who will come away as a leader in the profit margin rich segment.

The pick-up truck market is set to radically change when Ford plans to launch its completely redesigned F-150 later this year. The F-150 will have an industry first aluminum body and weighs in 700 pounds lighter than its predecessor. The new truck could set the new standard for fuel economy without compromising on power and durability.

Remaining manufacturers

Toyota (NYSE: TM) reported that its sales declined 4.2 percent to 159,284 units.

Honda (NYSE: HMC) reported that sales declined 7.0 percent to 100,405 units.

Nissan reported that its sales rose 15.8 percent to 115,630 units.

Hyundai reported that its sales declined 6.3 percent to 49,003 units.

Volkswagen reported that its sales declined 13.8 percent to 27,112 units.

Subaru reported that its sales rose 24 percent to 34,909 units.


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