US auto sales may slide in Oct
Oct 28th, 2007 by admin
Auto analysts forecast another slow month for the industry in October, with Ford Motor Co falling hardest as it cuts sales to rental-car fleets. Erich Merkle, vice president of auto industry forecasting for consulting company IRN Inc in Grand Rapids, said sales will probably be soft through the rest of the year because of the weak economy and anxious consumers.
Merkle’s dim view was echoed throughout the industry. On Wednesday, AutoNation Inc., America’s automotive retailer, said its third-quarter profit tumbled 12 per cent. AutoNation Chairman and Chief Executive Mike Jackson said he expected auto sales will be hurt by confidence-sapping weakness in the housing market well into 2008 despite tight management of expenses and inventory.
Merkle predicted an annualized sales rate of 16 million vehicles for October. The annualized rate shows what sales would be if they continued at the same pace for a year. The rate in September was 16.2 million, according to Autodata.
Sales volume
The auto research site Edmunds.com expects 2.4 per cent sales growth for October versus a year ago. Edmunds said Japanese automakers and General Motors Corp could buck the trend because of hot-selling new vehicles, including the redesigned Honda Accord and Cadillac CTS sedans.
An October decline would mark a year since Ford has seen a monthly sales increase, according to Ward’s AutoInfoBank.
Toyota Motor Corp is on track to replace Ford as the second largest automaker after GM in the US market, based on sales in the first nine months of this year. Edmunds.com chief economist Jesse Toprak predicts Ford’s sales will drop 16 per cent in October, while Toyota sales will rise.
Market strategy
Ford is ready to take the hit. It wants to reduce sales to rental-car agencies because they can hurt brand image and resale values. In September 2006, for example, Ford sold nearly 23,000 of its old Taurus models to fleets. This year, Ford is no longer selling the old Taurus, and its new Taurus cannot make up the lost volume. Ford sold 4,230 new Taurus sedans this past September, according to Autodata.
Ford is not the only automaker on a bumpy ride this fall. Toyota reported its third straight monthly decline in September, a string of rare losses for the automaker. Toprak says Toyota’s sales will be up in October, but Merkle believes they’ll be flat.
Merkle said Toyota has been hurt by declining home values and foreclosures in California, which is one of its top markets. He said Toyota also has a full line of vehicles now, including large pickups, and therefore feels more of the pain from high gas prices and slowdowns in construction.
“They’re not immune to economic softness anymore,” Merkle said