U.S. Autos Have Their Heads Handed to Them

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The auto scene is heating up.  New car sales have hit highs that have not been seen for 4.5 years.  From last Tuesday’s sales release, the big autos blew away analyst sales forecasts.

Foreign autos took center stage, led by Toyota’s (NYSE: TM) 42% year-over-year light-vehicle sales jump, and Honda (NYSE: HMC) also notched a 31% gain in light-vehicle sales.  In all, the auto sector moved 1.19 million cars and light trucks, representing a 12.8% annual gain.

Below is a breakdown of results by company, highlighting the notable achievements of each firm.

Toyota

Toyota’s sales increase put its light vehicle sales up to 171,910 for September, an astonishing 42% move from last September.  The move reveals that Toyota has significantly recovered from the earthquake that hit its Japanese plants in March of 2011 and is ready to fire up its engine of profits.  Toyota has been successful as it stays on the forefront of efficient gas mileage.  The company gained notoriety by offering its new plug-in Prius for $32,000 – the car gets 95 mpge, and 50 mpg when it travels as a hybrid.  Look for this car to see increased sales if gasoline prices head higher.

Honda

Honda also blew away expectations, upping sales 31% to 117,211.  The company fared strongest in its staple brands, the Civic and the Accord.  Both saw a 57% increase from the prior year, likely a result of gas prices approaching $4 per gallon. 

The 2013 Accord starts at just $21,680, and the car gets a reported 27 mpg in the city and 36 mph on the highway.  There is a caveat to Honda’s success, however.  On October 1, Honda announced that it would recall 500,000 Accord automobiles “because of potential fire risks.”  The recall could hurt new Accord sales into late 2012.

Chrysler, owned by Fiat (NASDAQOTH: FIATY.PK)

Chrysler bumped up its sales by 12%, selling a very respectable 142,041 light-vehicles.  Part of the sales came from the company’s new Dodge Dart, which posted 5,235 sales last month.  Chrysler has been on a tear as of late, perhaps a result of hiring Olivier Francois, the Paris-born Chief Marketing Officer. 

Francois was responsible for the 2012 Super Bowl ad with Clint Eastwood, which boosted brand awareness by 2,700% within 24 hours.  Also, his 2011 Super Bowl spot featuring Eminem upped brand consideration 267%.  Francois has done a superb job for Chrysler, which remains a central reason that its parent Fiat posted a profit last quarter.  Under Francois, I expect Chrysler to continue producing top-tier marketing efforts, and as a result, increased sales for its parent Fiat.

General Motors (NYSE: GM)

The American autos have been a slightly different story.  GM posted just a 1.5% sales increase over last year, moving 210,245 vehicles.  Along with Ford (NYSE: F), GM cited fewer pickup sales as the culprit. 

The biggest came from lackluster sales of GM’s Chevy Silverado, which fell 19% over last year.  GM claims that the sales drop is a result from fewer “truck sales to fleet customers,” but it expects stronger truck sales next month.  The Silverado starts at just $22,595, but the price quickly moves up for improved and hybrid models.  If GM hopes to ramp up sales, gaining fleet contracts will be a key to success.

Ford

Ford fared far worse than the competition.  Ford booked a .2% drop in sales, 456 less than last year’s 174,910 sales.  Ford did increase its F-150 truck sales by 1%, but its overall truck sales plummeted 7.6% over last September 2011 – a likely result of Ford ending the Ford Ranger from its line.

Sales throughout 2012 could pick up as Ford pushes its new Ford Fusion.  The vehicle starts at $21,700, and has a number of chic new features, such as an interior lighting kit.  Overall, Ford hopes to up its sales by selling more trucks, and by selling its flagship sedan.

With auto sales picking up in the U.S., companies will be scrambling to earn those extra customers.  And with the financial system getting back in order, banks have coffers of dollars that must be converted into new loans. 

Though the American autos outsold their Asian counterparts, they must be wary – from a growth perspective, Detroit autos had their heads handed to them.  Detroit: better luck next month.

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