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European Car Sales Plummet in July and August

Renault and PSA Groups advance as Ford, Fiat and GM decline.

by on Sep.16, 2010

The real battle for world dominance will be in China where VW is firmly entrenched.

VW remains number one in Europe as PSA and Renault pick up share.

The European car market continued stuck in reverse this summer, according to the latest sales data released this morning by ACEA, the automakers trade association. This continues a worrisome downward trend from the 2nd quarter of 2010 when vast taxpayer-subsidized replacement programs initiated the previous year began expiring.

As in the U.S., European taxpayers appear to be revolting against an endless expansion of government spending, making further subsidies of local industries increasingly difficult.

While the results are important in themselves because they involve the world’s players and their ability to fund future products to ensure survival, it is also indicative of where the U.S. market might be heading with, say, five or more makers competing closely for the top volume rankings.

In  Europe all others fight for table scraps as smaller makers who need to play in global markets use marginal operations there to survive. It could happen here.  Once upon a time a maker could thrive in the U.S. alone – it’s now a business planning fairy tale in my view.

In Europe, new registrations fell by 18.6% in July and 12.9% in August. Eight months into the year, new cars in the EU totaled only 9,021,703 units or 3.5% less than over the same depressed period a year ago, which itself was artificially propped up by government spending on incentive programs.

In July, a double-digit collapse occurred in the main volume markets, ranging from -12.8% in France to -13.2% in the UK, -24.1% in Spain, -25.7% in Italy and a whopping -30.2% in Germany, traditionally Europe’s economic powerhouse and export giant. Overall, 1,032,893 new cars were registered in the EU, or 18.6% less than in July last year.


Revenge of the Clunkers – August Vehicle Sales Dive

Lavish taxpayer subsidies of last year come home to roost. Toyota, Honda, Nissan, Hyundai, and Ford post big declines.

by on Sep.01, 2010

The U.S. sales numbers for August on a raw basis are stark: Toyota is off -34% ; Honda Dropped -27%; Nissan down -27%; and even Hyundai and Ford – current media darlings- saw sales declines of more than 11%, compared with a year ago, according to Autodata Corp.

General Motors – in the midst of a stock offering where investor confidence will be key to success – saw wholesales of 185,000 vehicles, or a -25% drop from the year ago month. And the industry on average is off, sit down, -21%.

Offshore brands sold 555,425 vehicles during the month, down from 591,297 in July, but up from 525,845 in June. They occupied 55.7% of the market, a decrease from last month’s 56.3%. Asian nameplates, which greatly benefitted from Clunkers, took  a 46.9% share, down from 48.2% in July, but up from 44.8% in June. European nameplates gained slightly over last month with an 8.8% August share. Detroit Three brands finished the month with 44.3%, up from 43.7 % in July but down from 46.5% in June.

Executives universally claimed that the taxpayer subsidized CARS program – aka Cash for Clunkers – was responsible. It’s true Clunkers  artificially boosted sales rates to 14 million on an annual basis using, borrowed, taxpayer funds.  But more is going on here as consumer confidence remains badly shaken and sales tailed off during the month.   (See Ken Zino on Flat Incentives, Economic Blahs Kill August Sales)

Data not Drivel!

So, no surprise to the growing number of non-working stiffs, as this week’s growing unemployment numbers will reveal on Friday, the U.S. economy is tough, getting tougher and showing little signs of reviving in spite of record deficit spending by politicians, which was claimed to be the medicine needed to get it back on track. What we need is growing payrolls, not posturing pundits from either fat cat party or screaming “news” outlet.


Commercial Vehicle Registrations Hit Record Levels

A slight revival of new fleet sales creates a used truck bonanza.

by on Sep.01, 2010

In the commercial truck market, the sales have shifted to used vehicles.

There were 354,400 used commercial vehicles registered in the U.S. during the first two quarters of 2010. This is a new record for previously owned commercial vehicle registrations in the period, and up more than 28% during the same, depressed, time last year.

The used trucks – Gross Vehicle Weight classes 3 to 8 – represent almost 68% of the total commercial vehicle market.

“The significant increase in used vehicle registrations so far this year is indicative of an uptick in the industry with the changeover of the commercial fleet,” said Gary Meteer, director, sales and client services, at R. L. Polk & Company, which compiles such statistics.

The trend, if it holds, should eventually bode well for the economy as combined registrations for all commercial vehicles in the first half of 2010 were 524,700, representing a 19% increase over the same period last year. New commercial vehicle registrations saw just a slight increase of 3.1% during the period, though, reflecting the reluctance of businesses to invest in the faltering U.S. economy, and  concentrating instead on cost cutting and layoffs during the ongoing Great Recession.

Data Driven!

“Large fleet owners and operators are upgrading to new vehicles, and therefore the smaller fleet companies and independent owner-operators have great opportunities to find available clean used equipment,” Meteer claimed.


Flat Incentives, Economic Blahs Kill August Sales

Mid-term elections loom large as Congress vacations.

by on Aug.31, 2010

Neither party appears to have a plan to restore middle class jobs.

New-vehicle retail sales in the last week of August slowed considerably, pulling down the August selling rate below 8.5 million units, according to the latest data from J.D. Power and Associates.

For total sales, the seasonally adjusted annualized rate (SAAR) is expected to come in below 11.4 million units, with fleet sales offsetting some of the weakness in retail sales.

This is far below the 16-17 million unit years the industry thrived on earlier in the decade, and the latest indicator – among many – that the U.S. economy is in trouble.

The final sales numbers, which will be out tomorrow as auto makers report shipments, increase the pressure on the incumbent Obama Administration to do something about the ongoing Great Recession and staggering levels of unemployment in the stalled U.S. economy.

While Republicans remain critical over deficit spending, the party that presided over the reckless practices of Wall Street that led to the current economic collapse are offering no ideas on how to get what was once $13 trillion in U.S. gross domestic production back on track, as businesses continue to cost cut, not invest,  and consumers stay home.


GM Posts a $14 billion Q2 Turnaround

Profits of $1.3 billion jump from $13 billion loss during the same period in 2009 when it was bankrupt as cost cutting takes hold.

by on Aug.12, 2010

Good enough progress for long enough to peddle the taxpayer owned stock?

General Motors Company today announced its second quarter 2010 results with revenue of $33.2 billion and net income attributable to common stockholders of $1.3 billion. This is about a $14 billion swing when compared to the loss of almost $13 billion in Q2 of 2009 when it was bankrupt. GM only survived because of lavish taxpayer subsidies from the Canadian and U.S. governments.

GM earnings per privately-held share on a diluted basis tallied at $2.55.  GM’s second quarter earnings before interest and tax (EBIT) was $2.0 billion.

Whether the results are good enough to engender private and institutional investor confidence in a pending IPO will be a matter of much debate today. Since the offering will be among the largest in history, its timing is crucial to acceptance.

“Yes, these are good enough results to get an IPO done,” said Joe Phillippi of the AutoTrends consultancy. Phillippi, who has written road show presentations for IPOs, noted that big questions remain around market conditions. “‘How many shares and at what price will private and institutional investors accept?” Phillippi said.

GM refused to comment on the IPO.

During the second quarter, GM vehicle production was up in all regions, totaling about 700,000 more vehicles at 2.3 million than the previous quarter. It estimated its global market share at 11.6%, with  share gains in every region.


GM Q2 Results Tomorrow. IPO Filing Friday?

Look for significantly improved profits, as production is way up, costs slashed. Only problem is Opel's bleeding in Europe.

by on Aug.11, 2010

No one is happy with taxpayer ownership of GM.

General Motors Company is due to release Q2 results tomorrow morning that some analysts predict will be a significant improvement on its Q1 performance.

Some of the speculation was prompted by GM CEO Ed Whitacre, who recently said that the privately held company would post impressive results in Q2, implying it would far surpass a profit of $865 million in Q1.

A blowout quarter is the next step in building a story for potential buyers of new GM stock when the reorganized company goes public, a goal that all senior executives are focused on, with considerable pressure from the Obama Administration. Facing increasing Republican criticism of government spending, the Administration wants to put the politically unpopular taxpayer funded auto bailouts behind it before the midterm Congressional elections this fall.

Government Motors, as GM is derisively known in conservative circles, is also a huge marketing negative for a company that has been losing share for decades.

An IPO will require an Securities and Exchange Commission filing that could come as soon as Friday, says Joe Phillippi of the AutoTrends consultancy.


Chrysler Group Trims Loss to $172 Million in Q2

Italian-controlled company once again promises 2010 breakeven or better numbers. IPO still coming in 2011.

by on Aug.09, 2010

Chrysler CEO Sergio Marchionne, center, UAW President Bob King, right, and UAW Vice President General Holiefield, left, applaud U.S. President Barack Obama during a visit on July 30, 2010.

Chrysler Group LLC today said that Q2 net revenues increased to $10.5 billion, an 8.2% improvement over the prior quarter. First half 2010 net revenues totaled $20.2 billion.

As a result the company ended Q2 2010 with an operating profit of $183 million and a first half 2010 operating profit of $326 million.

However, Q2 resulted in a net loss of $172 million, down slightly from a loss of $197 million in Q1.

Analysts had projected an operating profit of $400 million. And achieving profitability is crucial to plans to taking the company public some time in 2011.

In the 14 months since Chrysler emerged from bankruptcy it has only had one major product launch, the Jeep Grand Cherokee, which just went into production at the end of May. The changeover cost the company $64 million in revenue, not including tooling and other plant costs. Moreover Chrysler is carrying enormous interest costs from outstanding taxpayer loans. Payments of $296 million in Q2 accounted for nearly all of the swing between the operating profit and the net loss.

Chrysler marketshare remained at 9.4% in the United States and down slightly to 12.9% in Canada, its two primary markets as it has almost no presence overseas.

Sergio Marchionne, Chief Executive Officer, Chrysler Group said, “an extraordinary amount of work still lies ahead,”


Auto Supplier Comeback Well Underway

Cost cutting and massive firings mean bigger profits from incremental production or sales increases.

by on Aug.04, 2010

BorgWarner supplies its DualTronic transmission and controls for Fiat's Alfa Romeo MiTo.

Early returns from some key automotive suppliers such as Federal Mogul, American Axle, BorgWarner and Tenneco indicate the sector continues to benefit from the modest increase in production and from huge restructuring and cost cutting as results surpassed the expectations of securities analysts.

Federal-Mogul Corp. of Southfield, Michigan has reported a 23% increase in sales and 17.1% increase in net income for the second quarter, beating estimates of analysts by a substantial margin by posting sales of $1.6 billion and earnings of $49 million.

“Federal-Mogul’s results in the second quarter of 2010 show our ability to deliver strong financial performance by converting incremental revenue to profitability due to our continued focus on efficiently managing our cost base established during 2009,” said Jose Maria Alapont, president and chief executive officer.

Federal hit $1.6 billion versus $1.3 billion recorded during the same period one year ago. Net income was $49 million or 49 cents per share.  Analysts’ consensus earnings expectation was 32 cents per share, according to the company’s second quarter financial statement.


Federal Mogul’s stronger sales performance stemmed from share gains in all regions and markets, on top of a significant improvement in global automotive demand, Alapont said.


Toyota Posts Strong Quarterly Results

Net income of 190 billion yen ($2.2 billion) comes from selling 419,000 more vehicles. Production, profit forecasts increased.

by on Aug.04, 2010

Challenges remain with currency value, the end of incentives in Japan, and a weak Europe.

Sales and profits increased strongly at Toyota Motor Corporation as the Japanese giant this morning posted a profit in its first quarter of fiscal year 2011. TMC had produced a large loss in the year earlier quarter.

Toyota made a 190.47 yen billion net profit in its quarter ended June 30, a turnaround from net loss of 77.82 billion yen in the same quarter a year earlier. This is Toyota’s highest quarterly net profit since Q2 of 2008.

On a consolidated basis, net revenues for the first quarter totaled 4,871.8 billion yen, an increase of 27.0% compared to the same period last fiscal year. Operating income increased from a loss of 194.9 billion yen to 211.6 billion yen, while income before income taxes and equity in earnings of affiliated companies was 263.0 billion yen. Operating income increased by 406.5 billion yen.

Toyota said major factors contributing to the increase include the effects of marketing efforts of 400 billion yen and cost reduction efforts of 50 billion yen. The finance unit also posted strong profits as residual values increased.

Toyota said it expects to increase marketing expenses in the second quarter to increase volume. In the U.S. for example, Toyota vehicle sales decreased by 7%, even though the overall market increased 5% in August. North America remains Toyota’s largest market, followed by Japan.


Toyota Reports U.S. Sales Down 7% in July

Leading Japanese maker slips behind, in spite of incentives.

by on Aug.03, 2010

Still the retail sales leader.

Toyota Motor Sales (TMS), U.S.A., Inc., today reported July sales of 169,224 units, a decrease of 6.8% compared to the same period last year on a daily selling rate (DSR) basis.

Overall the industry was up 5.1%, according to Autodata Corp.

On a volume basis, unadjusted for 27 selling days in July 2010 compared to 26 selling days in July 2009, TMS sales were down 3.2% compared to the same period last year.

Looked at either way the ailing Japanese giant is stumbling in a rising market.

Toyota’s Fleet sales remain low versus the Detroit Three, with Toyota at less than 7% of volume. This compares to four times that when compared with Detroit marketing practices.  Moreover, Toyota incentives remain at levels of about 50% to 60% of the industry, which is now running well over $3000 a unit, depending whose numbers you cite.