US auto sales likely slipped in November as concerns about the strength of the economy and fallout from the collapse of the US housing market kept buyers from showrooms, analysts say. Vehicle sales, widely watched as a leading indicator of consumer spending, began slowing in the second quarter and are on track to finish the year with the lowest tally since 1998.
With concern mounting about the risk of recession, many analysts are now expecting a continued slide in US vehicle sales through 2008, which would mark the third-consecutive year of lost sales.
Goldman Sachs analyst Robert Barry recently cut his 2008 US sales estimate to 15.6 million vehicles on an industry- wide basis from 16 million, citing growing concerns on the overall US economy. In citing the reasons for his lowered outlook, Barry mentioned "a now-familiar litany of concerns related to housing and gas prices and the US consumer sentiment to near- recession levels."
For November, analysts expect total sales at a seasonally adjusted annual rate between 15.7 million and 15.9 million vehicles, down compared with the 16.1 million reported in November 2006.
Among US-based automakers, privately held Chrysler LLC is expected to take the hardest hit, with sales seen down as much as 18 percent in November General Motors Corp is expected to report sales ranging from down 1 percent to 6 percent, according to analysts.
GM vice chairman Bob Lutz told Reuters Autos Summit earlier this month the new Chevrolet Malibu has topped sales expectations by a wide margin in its debut month. Lutz also said GM appeared on track to sell about 3,000 of the new mid-size sedans in November, far higher than its projection for about 500 in the initial month.
Lutz also said the largest US automaker appeared on track to meet its monthly sales target overall. Analysts expect Ford Motor Co to report sales in a range between unchanged to down 3 percent compared with a year earlier when sales for the No 2 US automaker were already under pressure.
One continued concern for Wall Street analysts is whether the tightening of credit that has followed the collapse in loans to riskier home buyers is spilling over to the auto finance sector.
"While some dealers we spoke to complained about the increasing difficulty to get their customers approved for credit, especially for subprime or over-leveraged customers, we are not seeing consistent evidence yet of tightened credit terms," Lehman Brothers analyst Brian Johnson said.
Analysts expect Toyota Motor Corp, battling to replace GM as the top global automaker this year, to report a modest 2 percent increase in sales, while Honda Motor Co Ltd sales are expected to be up as much as 9 percent, driven in part by demand for its new Accord sedan.
Nissan Motor Co Ltd could lead the industry with a 10 percent gain in sales year-over-year, analysts said. Whatever the outcome for November sales, industry attention has shifted to how much further the contraction will run in 2008.
Wall Street analysts who met this week with GM Chief Financial Officer Fritz Henderson said he forecast industry- wide sales would drop to about 15.7 million units next year.
Lehman Brothers analyst Brian Johnson and Bear Stearns analyst Peter Nesvold both said on Friday that GM's forecast even at that lower level held out the prospect of an even deeper decline in the event of a recession.
Other forecasts put the bottom for the market lower. Thomas Stallkamp, a former Chrysler president and partner with Ripplewood Holdings, forecast at the Reuters Autos Summit earlier this month that US light auto sales could slip as low as 14.5 million in 2008. Such a decline would be the worst since US auto sales fell almost 11 percent in 1991, when the US economy was rocked by recession.
Comments
Comments are closed.