January Auto Sales Roundup

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Auto sales were off to a brisk start in 2013, posting a SAAR for the month of 15.3 million units—maintaining the strong pace we saw near the end of 2012 and up 14% year-over-year. Valuentum takes a look at how the major US auto OEMs performed.

Ford

Valuentum Best Ideas Newsletter holding and standout performer Ford (NYSE: F) announced fantastic sales figures for January. Total unit sales jumped 22% year-over-year to 166,501 vehicles, and retail sales jumped 24% year-over-year. Brand strength was pretty broad based, with unit sales of the F-series up 22%, the Fusion up 65%, and the Explorer up 45%. Company-wide car sales jumped 34%, outpacing utility vehicles and trucks, which increased 23% and 11%, respectively.

Unfortunately, the Lincoln brand continued to struggle, with unit sales down 18% due to weak performance from the MKZ. However, we did see some solid performance from the MKX, as well as the MKT, which helped total Lincoln utility vehicle sales jump 10% compared to the prior year. Regardless, aggregate company sales continue to outpace broader industry growth, and Ford remains a key holding in the portfolio of our Best Ideas Newsletter.

General Motors

General Motors (NYSE: GM) also posted a very nice January, with unit sales increasing 16% year-over-year to 194,699 vehicles. We saw performance diverge slightly across different brands, with unit sales at Chevrolet jumping 11% year-over-year and sales advancing 23% at GMC, 32% at Buick, and a whopping 47% at Cadillac. However, car sales at GM continued to lag the growth rate we’ve seen at Ford, increasing just 12% year-over-year. We simply do not think the firm has a product lineup to match competitors at this time, with Ford, Toyota (NYSE: TM) and Honda (NYSE: HMC) captivating buyers.

Crossover and truck sales were pretty strong, growing units 27% and 13%, respectively. The Buick Enclave sold incredibly well, with unit sales up 57% compared to a year ago. The extensive marketing and re-imaging of Buick and Cadillac over the last decade gives us hope that Ford’s Lincoln will also be able to re-invent itself.

GM also mentioned that full-size pick-up sales were up 32%, but the company provided some troubling news with regards to inventory, as shown in the image below (Image Source: GM).

GM’s full-size vehicle inventory is surging, and we think the company is having a difficult time competing with the F-series. We fear the firm may be stuffing dealers with inventory that will require heavy incentive spending to be moved. This could hurt profits from a truck that should be one of the company’s core earnings drivers. We continue to believe shares of GM are fairly priced.

Toyota

Toyota posted a fabulous January in the US, with volume jumping 27% year-over-year to 157,725 units and the firm’s daily sales rate increasing 22% year-over-year. Such performance reinforces why the firm is among our favorites in the auto space. Total Toyota brand car unit sales increased 24% year-over-year, with fantastic performance from the Prius (up 37%), Corolla (up 32%), and the Avalon (up 50%). Toyota’s brand is known so much for its fuel efficiency and quality that recent recalls haven’t hurt the brand’s reputation. SUV sales at the Toyota division soared 29% with broad-based strength across its entire lineup. Pickup sales were also solid, with unit sales up 29% year-over-year. We’re very optimistic about this segment as the US housing recovery continues to gain traction.

On the luxury side, sales at Lexus soared 32% year-over-year to 16,211 units. We like the recent models the company has revealed, and we believe the firm has a fantastic product that keeps buyers returning in droves. Although competition from Mercedes and Audi is strong, we think the Lexus buyer focuses more on reliability than trendiness, making the cash flow stream a little more reliable.

The company reported third quarter results earlier today, and although profit missed consensus estimates, the firm boosted its full-year earnings outlook to $9.3 billion. The firm also anticipates 6% unit sales growth in the US (2.2 million units in calendar 2013), so we think fiscal year 2013 will be a solid year, with fiscal year 2014 looking even brighter. Shares have some valuation upside from current levels, but we’d like to see the price retreat a bit before considering the name for the portfolio of our Best Ideas Newsletter.

Honda

Honda’s January sales fell short of the 21% consensus growth estimate, advancing 13% year-over-year to 93,626 units. Civic sales were slightly disappointing, remaining flat year-over-year, while sales of the Accord jumped 75%, driving total car sales growth of 21%. Trucks were the large disappointment during the period, with sales increasing just 0.3% at Honda (and only 3.7% when including Acura). Pickup sales at the company continue to lag the other OEMs, and the Ridgeline appears to be losing share against competitors. Overall, we need to see the Civic and Ridgeline sell better before getting too excited about the company’s fundamentals.

Chrysler, Volkswagen, BMW, and Mercedes

Chrysler, which we think will be fully owned by Fiat in the coming years, saw sales jump 16% during the first month of the year. Volkswagen was a tad weaker than what we saw through 2012, with sales increasing just 7% during the month, even though sales of Passat advanced 40%. Jetta sales, the firm’s flagship US model, slipped 4% year-over-year, driving most of the weakness. Its luxury brand, Audi, experienced solid 7.5% sales growth during the period as it remains one of the faster-growing names in the luxury space.

Mercedes posted solid growth, with units increasing 11% year-over-year thanks to strong C-Class sales. Low-end “starter” cars continue to be a key growth driver as well, with the C-Class selling 7,214 units—nearly one third of Mercedes’ US total. BMW was a bit weaker, with sales just 0.7% higher.

Ultimately, we think the stronger performance from lower-end brands shows how the US recovery is finally starting to hit the middle class. Given the years of lackluster sales, we think the auto recovery will remain a key economic growth driver in 2013.


Valuentum holds shares of Ford in its Best Ideas Newsletter. RJ Towner owns shares of Ford. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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