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Clunkers hangover hits September sales

by Bill Cawthon on

Last month was somewhat like “the morning after the night before” for light vehicle sales. After the huge “Cash for Clunkers” party in August, consumers spent much of the first half of the September picking up what little was left on dealer lots and automakers were trying to balance the need to replenish inventories with the need to avoid building too many new vehicles. There were signs that sales picked up in the last half of the month, but it wasn’t enough.

The seasonally adjusted annualized sales rate (SAAR) for September was 9.22 million units. That’s 10,000 sales short of April’s result and just 50,000 sales ahead of February which had the lowest SAAR recorded in decades. Automakers sold 745,997 cars and trucks in September, more than a half-million fewer than left dealer lots in August.

Sales were down compared to last September, as well, coming in with a 22.7 percent/218,876-unit shortfall. About 78.7 percent of that deficit came from two sources: General Motors and Chrysler. The two Detroit automakers saw sales plunge 45 percent and 42.1 percent respectively and gave up a combined 11.2 points of market share.

In Chrysler’s case, the slowdown in showroom traffic was combined with a shortage of inventory. The company shut down production for nearly two months in May and June and for another two weeks in July. This meant supplies of popular vehicles, like the Chrysler Town & Country and Dodge Caliber and Caravan, were in short supply and some dealers’ stock was wiped out by the August rush.

There was good news, though. Chrysler’s September market share was nearly a full point higher than it was in August, Wrangler sales were good, the Charger had a good showing. Even though Ram pickup sales were down, they had a good showing compared to GM’s pickups. The Ram trailed the Silverado by less than 6,000 sales. Chrysler’s 56-day inventory level is a plus, as well, down by over 60 percent compared to last September.

GM is still struggling. It doesn’t have the worst year-to-date sales deficit of the major automakers (Chrysler does), but it had the biggest drop in sales, with a major drop in light truck sales, and also lost the biggest chunk of market share compared to last September. GM’s market share in September was 20.9 percent, slightly better than August 2009 but down 8.4 percent compared to the same month last year. Just like Peter Fong, Chrysler’s head honcho for sales, GM’s Mark LaNeve focused his comments on comparisons with August 2009 rather than September 2008.

Ford finished the month in comparatively good shape. The Dearborn automaker, which signed over the title to everything it owned before the bottom dropped out of the credit market, continues to outperform its Southeastern Michigan rivals. Sales were down just 5.1 percent and the blue oval gang picked up 2.8 points of market share, the biggest gain for any automaker. Sales of the F-Series pickup were up 3.5 percent and the new Taurus is receiving a warmer reception than its predecessor. The Fusion remains the top-selling American-badged car in YTD sales, though short supplies of the popular Ford sedan allowed the Chevrolet Impala to take the title for the month.

Toyota, which is currently facing a major recall, lost some ground in September, reporting sales down 12.6 percent. The Sienna was the top-selling minivan for the month and the Camry retained its position as the best-selling car and second-best-selling vehicle in the U.S. Lexus sales were in the black, up 7.3 percent, as Toyota’s premium marque held on to a narrow lead over BMW.

Honda sales were down 20.1 percent and Nissan fall measured 7.0. percent, leaving it in sixth place for the month and year.

Subaru continued to be the only Japanese automaker to beat its year-ago numbers, coming in 0.7 percent ahead of last September. Subaru’s YTD sales are now 10.2 percent ahead of the first nine months of 2008, making it the top-performing automaker in terms of year-over-year comparisons.

The Japanese automakers combined for a 39.4 percent share of the light vehicle market in September, second only to the 4.5 percent share held by GM, Ford and Chrysler.

Hyundai and Kia both finished in the black for the month. Hyundai added 1.7 points of market share to its horde with sales 27.2 percent ahead of September 2008, the largest increase of any of the automakers. Kia sales were up 24.4 percent as the junior Korean automaker celebrated its best sales quarter ever.

Most of the European automakers came in ahead of September 2008. BMW’s margin was 2.1 percent while Mini sales jumped 9.7 percent. Volkswagen sales were up 1.5 percent as the Jetta and CC brought in solid gains. The Chrysler-built Routan minivan enjoyed a 140% jump in sales. Porsche sales were also up by 8.4 percent as the European automakers enlarged their piece of the pie by 1.8 percent. Audi missed its mark by 4.9 percent but added to its market share. Daimler AG was down 13.4 percent, the worst deficit of any of the German automakers. A 9.6 percent miss by Mercedes was magnified by a 54.2 percent plunge in sales of the Smart micro-car.

Even with September’s disappointments, U.S. light vehicle sales are quite likely to top the 10 million mark. August’s incentive-fueled spree added enough sales that sales in October, November and December need only to hit the level achieved last month. Automakers point to signs of improvement in the economy with a few predicting 17-million annual sales by 2014, but no matter what the stock market does, a real recovery in the new car market is going to take some real recovery in the jobs market and we haven’t seen any real jobs creation yet.

When the recovery does come, it will find significant changes in the landscape. Most industry-watchers believe GM’s long reign as the top automaker in America is over, just as its long reign as the world’s top automaker has ended. While they may have been a drag on the company, the loss of Pontiac, Saturn and, to a lesser extent, Hummer and Saab, won’t leave the General with enough sales to maintain its position. Ford, with its strong momentum, is being touted as the new king, but the fact remains that Toyota is still selling more vehicles than Ford. Dearth of new product will likely postpone a significant recovery for Chrysler until at least 2011, when new models developed with Fiat hit the market and the folks in Auburn Hills can field competitive passenger cars.

There’s already talk of a second round of government rebates; the first round was one of the few few federal programs in recent memory to have delivered the results promised and 2010 is an election year. However, as was true with GM’s employee pricing promotion, a replay is unlikely to achieve the spectacular results of the original. The low-hanging fruit has been plucked; millions of would-be carbuyers are still unemployed or under-employed and credit is still fairly tight.

We may have seen the bottom of the market, but we’re still a long way from daylight.

Top 20 by sales through September 30

1. Ford F-Series – 295,426
2. Toyota Camry – 264,357
3. Chevrolet Silverado – 229,388
4. Honda Accord – 221,369
5. Toyota Corolla – 215,038
6. Honda Civic – 207,883
7. Nissan Altima – 154,662
8. Dodge Ram Pickup – 143,205
9. Honda CR-V – 142,906
10. Ford Fusion – 134,600
11. Chevrolet Impala – 126,856
12. Ford Escape – 126,268
13. Ford Focus – 125,913
14. Chevrolet Malibu – 118,995
15. Toyota Rav4 – 106,863
16. Toyota Prius – 104,794
17. Toyota Tacoma – 85,773
18. GMC Sierra – 79,433
19. Honda Odyssey – 77,978
20. Ford E-Series Van – 66,816

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.


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