Auto sales limp towards end of rough year
Major automakers all report sharp drop in November from October levels, show continued weakness in new car demand, but see some signs of stabilization.
NEW YORK (CNNMoney.com) -- The worst year for U.S. auto sales in decades isn't getting much better yet.
Major automakers reported November sales that met or beat expectations. Still, those sales look good only in comparison to dismal year-ago results and represent a sharp drop from October's sales.
Overall industry sales were essentially unchanged from year-ago results for the second straight month, coming in at a seasonally adjusted annual sales rate of 10.9 million vehicles.
The good news is that was the third best sales rate in the last 13 months, trailing only the two summer months that saw a spike in sales from Cash for Clunkers. The bad news is that before the downturn in sales hit the industry in October 2008, the latest sales rate would have been the weakest since 1983.
"Holding steady from last year isn't necessary good, but it could be worse," said Jessica Caldwell, senior analyst with sales Edmunds.com. "We're not out of the woods yet. People are still only buying cars out of necessity."
Ford Motor's (F, Fortune 500) November sales were virtually unchanged from year-earlier results. Sales were down about 10% from October's level, not an unusual seasonal decline. Overall, Ford's sales were roughly in line with the forecast of sales tracker Edmunds.com.
Ken Czubay, Ford vice president, said the company is pleased with the November sales level and mix of vehicles sold, especially since 90% of the sales were of 2010 models new to showrooms.
"It appears that auto sales have stabilized and the worst is behind us," he told analysts and journalists on a conference call.
General Motors reported about a 1.8% drop in November sales compared to the same month a year ago, only slightly worse than the 1.3% drop forecast by sales tracker Edmunds.com. But that left sales in the period down 15% from the October sales.
GM officials also said they were pleased that sales were going in the right direction. Its sales were off slightly from a year ago. When one reporter pointed out to Mike DiGiovanni, GM executive director of corporate planning, that he had called year-ago results "unsustainable" at that time, he responded "I was right, We went bankrupt. It wasn't sustainable for us."
But DiGiovanni and other GM executives said the reorganization it went through during the bankruptcy process, especially the shedding of weaker brands, left GM in a much better position to survive at these reduced levels.
Much of the weakness in GM sales came from a 48% plunge in sales at the brands GM is in the process of shedding: Pontiac, Saturn, Hummer and Saab. The four "core" U.S. brands it is keeping going forward: Chevrolet, Buick, GMC and Cadillac, posted about a 6% rise in sales from year-ago levels, although they fell 13% from October levels.
The company is in the process of shutting down Pontiac and Saturn and is trying to close a sale of Hummer to a Chinese manufacturer. It announced late Tuesday it is looking at possible alternatives for Saab after a deal to sell it to a Swedish sports car maker fell apart last week.
Susan Docherty, GM's top U.S. sales executive, said the company has just over 17,000 vehicles from discontinued brands left. Only the Hummers are still being built at GM plants here. She believes it will take between three to four months to sell-off the remaining inventory.
Both Ford and GM announced first quarter production targets well ahead of their output during the first three months of this year, when U.S. industrywide sales plunged and many factories were idled. Ford production will be up 58%, while GM production will jump 75%.
But those comparisons are to a period when both companies were struggling to save money and avoid bankruptcy, which only Ford was able to do among the major U.S. automakers. The first quarter production is set to be roughly in line with levels during the current quarter -- GM will be up 5%, while Ford will be down 4% from the current period.
Toyota Motor (TM) reported an unexpected 3% gain in November sales compared to a year earlier. Edmunds had forecast a 4% drop in sales. It allowed Toyota, which overtook Ford in U.S. sales this summer, to main its hold on the No. 2 position in the market behind only General Motors.
Still, Toyota's November sales were down 12% from October's levels.
Honda Motor (HMC) reported a 3% drop in U.S. sales from year-ago levels, better than Edmunds' forecast of a 9% drop but still 13% below October levels.
Chrysler Group reported a 24% drop in sales compared to a year ago, but that was actually much better than the 35% plunge that had been forecast for the group. The company reported a 25% drop from October sales.
The only major automakers to report sales increases were Nissan (NSANY), where U.S. sales jumped 20% from year ago levels, and the Hyundai Motor Co., which posted a combined 34% surge in U.S. sales at its Hyundai and Kia brands. Both companies topped Edmunds' estimates. But even with those gains, both companies posted declines from their October sales totals.