Chrysler May sales beat analysts predictions

Posted on June 3rd, 2009 • by Bill Cawthon

Chrysler came in ahead of forecasts that predicted a sales slump of more than 50 percent. All three Chrysler brands improved on their April results giving the company its best retail sales so far this year. Overall sales were down 47 percent compared to May 2008, but that’s not too shabby considering the company spent the entire month in bankruptcy, its production lines were idled and fleet sales were down 90 percent. That meant that 94.6 percent of all Chrysler sales were at retail, a figure that’s well ahead of the overall auto industry.

The Jeep Wrangler continued as America’s favorite traditional SUV and even managed a small 34-unit improvement on its May 2008 numbers. Ram pickup sales were down, but by a smaller margin than any other full-size pickup except the Chevy Silverado.

Minivans took a hit; the Town & Country dropped to second for the month and in year-to-date (YTD) sales behind the Honda Odyssey. Caravan sales dropped 58.6 percent last month, leaving it trailing the Toyota Sienna. The Caravan is still hanging on to third place in YTD sales.

Car sales accounted for 22.8 percent of Chrysler’s overall turn, way down from the 28.3 percent they claimed last year. That’s not surprising as passenger cars accounted for 51.2 percent of total light vehicle sales in May 2009, down from 56.9 percent last year as the feeding frenzy for small cars took off in the face of skyrocketing gasoline prices.

May was a ray of sunshine for the industry as total light vehicle sales came in well ahead of analysts’ expectations. The seasonally adjusted annualized sales rate (SAAR) came in at 9.91 million units, the highest since last December and thousands of sales ahead of the 9.2 million that had been forecast. Given the improvement in consumer outlook and some economic indicators, there’s hope that sales may have bottomed out and the industry can come in at the end of the year well above the 10 million mark.

All three Detroit automakers beat the seers’ crystal balls. Ford sales were down 24.1 percent in May. The Fusion remained the best-selling American-badged car and the Flex actually outsold the Dodge Journey for the month, breaking the 4000-unit mark for the first time. The Ford F-Series pickup retained its lead over the Chevy Silverado as America’s favorite vehicle and Lincoln came in with a sales increase as it beat Cadillac in sales for the month.

Even as General Motors teetered toward Chapter 11, it pulled off an upset. While analysts were projecting a plunge as steep as 42 percent, GM came in with a much smaller deficit of 29 percent. As was the case with Chrysler, GM’s results came from improved truck sales with large increases in sales of the Buick Enclave and Cadillac Escalade.

Both Toyota and Honda came in over 40 percent behind their May 2008 numbers. Honda’s fall was softened somewhat by the fact May 2008 was the company’s best sales month ever and still left it ahead of Chrysler in the volume rankings. Nissan, with a 33.1 percent stumble, fared best of the major Japanese imports.

Of the second-tier players, Subaru once again outpaced the pack with a small five percent deficit that was enough to tip them into the red in YTD sales. Mazda took a 40.1 percent hit while Mitsubishi sales nosedived 58.3 percent. American Suzuki numbers tumbled 75.1 percent as its car sales nearly vanished. The reason for that is the replacement of the Daewoo-built Forenza (it was the old Daewoo Nubira) and Verona by the newer Suzuki-Fiat SX4.

Hyundai and Kia both ended up in the minus column, Hyundai by 20.4 percent, Kia by 16.1 percent but both still have only single-digit shortfalls in YTD sales, leaving them in relatively good shape.

Volkswagen and its upscale Audi sibling fared the European brands with 12.4 percent and 12.1 percent declines. Volkswagen’s new TDI diesels are doing well giving the Jetta a 27.6 percent improvement. Sales of the new Passat CC are doing well and Tiguan sales are up 66.9 percent. VW sold 1,390 of the Chrysler-built Routan minivan in May. Volkswagen is now the best-selling European brand in YTD sales.

BMW brand sales dropped 27.6 percent in May leaving the Bimmer 30.5 percent behind its 2008 YTD mark. Sales were still good enough to keep BMW at the top of the luxury segment. Mini sales were down 27 percent.

Mercedes-Benz came up 30.6 percent shy of its May 2008 mark, leaving it at No. 3 among upscale brands. Sales of the Smart micro-car were down 56.6 percent.

Total light vehicle sales added up to 925,824 cars and light trucks, down 33.7 percent from May 2008. For the first five months of the year, the industry is 36.5 percent off its pace from the same period last year. However, everyone is hoping that April’s dismal results were a glitch and that the trend started in March will continue.

It’s pretty well understood that the days of 16 million annual sales are gone and even talk of 12 million sales is largely absent from current discussions. Last year, General Motors had its worst sales year since 1959, in terms of volume, and is setting its sights on shrinking to be able to break even if total industry sales come in at ten million units. It’s likely going to cost the taxpayers in the U.S. and Canada close to $60 billion for this to happen and it’s likely the total bill for rehabilitating the American auto industry will top $150 billion before all is said and done. On the other hand, that’s still only a fraction of the money showered on the financial industry and we will have preserved at least a portion of our domestic manufacturing capability.

If June sales can continue the pace achieved in May, there’s a good chance the rest of the year will see more improvement. Right now, sales have made their worst five-month start since 1976, but we may have seen a light at the end of the tunnel that isn’t an oncoming train.

Assuming the latest legal challenges can be overcome, the new Chrysler could still exit bankruptcy by the end of this week and it will be interesting to see how the alliance with Fiat translates into action. If nothing else, Sergio Marchionne brings an energy that’s been missing at the top and it may be a good break for Chrysler that he lost to Magna on the Opel deal; that will give him more time to focus on the brands he now has.