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Posts Tagged ‘auto slump’

January Car Sales Running “Ahead of Expectations”

Recovery picking up steam.

by on Jan.24, 2011

Off to a fast start in 2011, the U.S. car market.

Picking up where already-solid December sales left off, things are looking good for January to continue the momentum of the automotive recovery, industry analysts suggest, one key observer noting that demand is running “ahead of expectations.”

So far, the ongoing run-up in fuel prices – which have now pushed the price of a gallon of gas to more than $3 in most of the country—doesn’t seem to be short-circuiting market momentum, observers indicate, though a further, sharp increase could still send things into a downward spiral.

If mid-month sales trends continue to hold, the U.S. auto market will show a 23% year-over-year gain for January 2011, forecasts the California-based market research firm, J.D. Power and Associates.  The industry, the firm reports, is “starting the year ahead of expectations,” with an annualized sales rate approaching 12 million – about 2 million ahead of January 2010 sales levels.


Auto Lenders Loosening Access To Credit

Riskier buyers gaining credit even as delinquencies fall.

by on Dec.07, 2010

Lenders lossen credit, but delinquencies and defaults still decline, reports Experian.

Barely a year ago, even some of the most affluent, credit-worthy customers were being turned away when they applied for automotive loans – one reason new car sales slumped to a decades-low 8.6 million for 2009.  But things are starting to turn in a positive direction, according to a new study by research firm Experian Automotive.

Not only have the spigots re-opened for buyers with top-tier credit scores, but even the “credit challenged” are beginning to find ways to land loans.  Significantly, the loosening of credit is matched by a sharp decline in both loan defaults and delinquencies, according to Experian’s analysis of third-quarter automotive lending.

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“Easier access to loans is a positive sign for the auto industry, as tighter loan criteria during the economic downturn represented a significant challenge for automotive manufacturers and their retail networks,” said Scott Waldron, president of Experian Automotive. “Making it easier for consumers to obtain credit can only help the auto industry moving forward.”


Cool Start, But May Sales Could Still Turn Hot

Is a major recovery in store for 2011?

by on May.21, 2010

Auto dealers are hoping to be busy in the coming weeks, as the traditional spring buying season gets underway over Memorial Day weekend.

The economic uncertainties that have rocked the stock markets may be translating into a slowdown in the U.S. new car market, but things may pick up in the coming days, reports J.D. Power and Associates, as the upcoming Memorial Day holiday normally ushers in the traditional start of the spring buying season.

But a separate report, by consulting firm A.T. Kearney, suggests automakers might be patient for the moment, predicting a huge recovery for the sluggish American auto market in 2011.

Using real-time data from dealers across the country, the California-based research firm says May got off to a “wavering start” on the retail side of the market.  The good news is that sales are likely to come in about 11% ahead of the dismal May 2009.  But volumes will nonetheless be down from April 2010.

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The industry is expected to sell 874,000 cars, trucks and crossovers this month.  On a seasonally-adjusted annual sales rate, or SAAR, that works out to 9.2 million vehicles.  But that’s down from 9.6 million in April.  The industry might have to point the collective finger at itself for the slowdown.

“Compared with April, incentives this month are flat at $2,800, which is contributing to the slower sales pace,” said Jeff Schuster, Power’s executive director of global forecasting. “However, with the unofficial start to summer approaching, consumers are more inclined to consider purchasing a new vehicle, and it’s likely that Memorial Day sales incentives will generate an even stronger close for May.”


Ford Turns In First Annual Profit Since ‘05

Maker continues gaining momentum.

by on Jan.28, 2010

Ford posts a huge turnaround during the worst year for the auto industry since the Great Depression.

Ford Motor Co. reported net income of more than $2.7 billion, or 86 cents per share, a $17 billion improvement from a year ago, as its comeback plans exceeded expectations by the delivering the maker’s first full year of profitability since 2005.

The full-year profit included net income of $868 million or 25 cents per share in the fourth quarter, $6.8 billion better than the company reported a year ago when many analysts were predicting Ford would be forced into bankruptcy right alongside General Motors and Chrysler.

The fourth-quarter numbers included a pre-tax operating profit of $707 million in North America, a market which many observers had written off as hopeless. Last year, Ford’s North American Operations lost $2.6 billion in the fourth quarter.

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Ford also posted pre-tax operating profits of $454 million for the full-year, a $7.3 billion improvement from a year ago, with significant help from Ford Credit, which itself rebounded in 2009 to post a $1.3 billion profit.

“While we still face significant business environment challenges ahead, 2009 was a pivotal year for Ford and the strongest proof yet that our One Ford plan is working and that we are forging a path toward profitable growth by working together as one team, leveraging our global scale,” said Ford President and CEO Alan Mulally, who also noted that Ford gained market share around the world last year.    (more…)

2010 Retail Sales Off to a Slow Start

Power predicting sales down from already weak January ’09.

by on Jan.22, 2010

Demand is strong for some models, like the 2010 Ford Fusion -- but weak overall.

After being hammered for most of the year, the auto industry got some reasonable good news with the December 2009 sales numbers, an upturn sizable enough to make “cautiously optimistic” the operating mantra among the industry leaders who assembled at this month’s North American International Auto Show.

But some might soon reassess even that guardedly upbeat attitude, at least if January’s preliminary sales numbers are any indication of what’s to come.  Using real-time dealer transaction data, J.D. Power and Associates is forecasting the current month will see another decline in car sales.

Retail volumes are anticipated to reach just 500,900, according to Power, which would translate into a seasonally adjusted annual rate, or SAAR, of just 7.9 million units.  That’s not only a letdown from the unexpected December sales thaw, which brought a SAAR of 8.9 million, but also a huge decline from January of last year, when the SAAR stood at 8.8 million.


U.S. Sales and SAAR – January 2010
January 2010 1 December 2009 January 2009
New-vehicle retail 500,900 (-4% Jan. 2009) 817,426 562,619
Total vehicle sales 659,000 (+9% Jan. 2009) 1,027,837 655,302
Retail SAAR 7.9 million 8.9 million 8.8 million
Total SAAR 10.1 million 11.2 million 9.6 million
1 Figures for January 2010 are forecast based on the first 11 selling days of the month.

“January is typically a weak selling month, but this month is particularly impacted by December’s strong close and extra selling weekend,” said Jeff Schuster, Power’s executive director of global forecasting.

But the steady stream of data did reveal at least some glimmer of hope, said Schuster, noting, “the sales pace has been improving as January continues, which is an encouraging sign for the recovering industry.”


Ray Young: Another GM Casualty?

CFO could be next to go as maker pairs exec ranks.

by on Sep.09, 2009

Will GM's 47-year-old CFO Ray Young be the next to go in a top management shake-up?

Will GM's 47-year-old CFO Ray Young be the next to go in a top management shake-up?

The downsizing of General Motors’ executive ranks continues, with numerous sources suggesting that the automaker’s Chief Financial Officer Ray Young will be among the next to go, as part of a shake-up in the corporate finance department.

Rumors have been circulating ever since the carmaker plunged into bankruptcy, earlier this year.  Adding fuel to that fire, GM CEO Fritz Henderson’s announcement on July 10th, the day the company emerged from Chapter 11, that a third of all senior executives would be let go by the end of October.

Shake Up Your News Sources!

Shake Up Your News Sources!

So far, a wide range of once-prominent GM bosses have been packing up their corner offices, including Troy Clarke, formerly president of GM North America, while others, such as Gary Cowger, head of manufacturing, plans to retire by year’s end.  So, few insiders would be surprised to see Young join them on the way out of GM’s  Renaissance Center headquarters.


Ford Debt Rating Raised, But Still Junk

More good news for Dearborn maker.

by on Sep.08, 2009

Ford's turnaround program has won the endorsement of Moody's, which has increased its ratings on the automaker's still substantial debt.

Ford's turnaround program has won the endorsement of Moody's, which has increased its ratings on the automaker's still substantial debt.

Ford Motor Co. got some good news last week as Moody’s Investor Service raised its rating of the company’s corporate debt for the first time in 14 years.

However, Moody’s continues to rate Ford as junk, or below investment grade, but changed the “Corporate Family Rating of Ford to Caa1 from Caa3. Moody’s also raised the company’s Speculative Grade Liquidity (SGL) rating to SGL-3 from SGL-4.

Moreover, Ford’s rating outlook was changed to stable from negative. In a related action, Moody’s placed the Caa1 senior unsecured rating of Ford Motor Credit Company LLC on review for a possible upgrade.

It was of course the rating agencies that said mortgage backed securities and other derivatives were AAA rated or virtually risk free, which was at the heart of the collapse of the global financial markets that led to the Great Recession, which is ongoing. With U.S. unemployment growing to almost 10% in August, the economy continues to shed workers, as businesses return to profitability by eliminating middle class jobs or moving them offshore.

“The rating actions reflect Moody’s belief that after a period of intensive restructuring of its operations and balance sheet, Ford’s business viability has significantly improved. The positioning of the CFR rating at Caa1 balances the substantial achievements the company has made in restructuring its operations and rebuilding competitiveness against the expectation that even with these improvements meaningful earnings and cash flow generation will not be evident before 2011,” said Moodys in a statement.

Translation: more red ink until two years from now.

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It's Debt Free!

“Moody’s believes that Ford has adequate liquidity to bridge itself until 2011 as reflected in the upgrade of the SGL rating to SGL-3.”

Ford has been receiving some good news, lately, but there had been some concern about the fact that the company, by not going into bankruptcy, like General Motors and Chrysler, remained saddled with a significant amount of debt.  But while Ford does continues to carry substantial debt on its balance sheet, the upgrade reduces the automaker’s borrowing costs, freeing up cash for other uses such as product development.


Q&A: Ford President Mark Fields

"Volatility is the new norm."

by on Aug.14, 2009

Though "volatility is the new norm," Ford President Mark Fields sees some solid signs for the U.S. auto market, driven in part by the Cash for Clunkers program.

Though "volatility is the new norm," Ford President Mark Fields sees some solid signs for the car market, driven in part by the Cash for Clunkers program.

“Volatility,” says Mark Fields, is the new norm.  And that is making it downright difficult to predict where the U.S. auto market is going, despite the sudden upturn in demand triggered by the federal Cash for Clunkers program.  Nonetheless, Ford believes things are moving in the right direction and will continue to improve once the federal cash incentives run out in the next month or so.

Fields is in Pebble Beach, this weekend, for the annual Concours d’Elegance, one of the world’s most lavish classic car shows in the world.  He set aside a little time to meet with’s Paul A. Eisenstein.

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Your connection to auto industry leaders!

TDB: The Cash-for-Clunkers program seems to be working, though to the large degree, aren’t the Japanese gaining more sales than Detroit?

FIELDS: Well, from our standpoint, it’s doing well for Ford.  We’re getting 16% of the people coming in for those deals and we have two vehicles in the Top 10, with Focus going back and forth with the (Toyota) Corolla for the number one purchase.  Our year-to-date market share is about 13%, so this bodes well for customer recognizing our products.


Toyota Suffering Setback With Suppliers

Ford gaining ground, according to new survey.

by on May.26, 2009

Building a solid relationship with suppliers can be as critical as building the right car, says a new study - which also found that Toyota's supplier relations have been suffering.

Building a solid relationship with suppliers can be as critical as building the right car. Toyota's supplier relations have been suffering.

After building a solid relationship with its suppliers that may have helped it, in turn, solidify its ties to American consumers, Toyota has slipped from the top spot in an annual study of carmaker supplier relations.

The decline, which could add to the list of recent woes facing the Japanese maker, was revealed in the ninth in a series of annual studies by the Detroit consulting firm, Planning Perspectives Inc.  The report shows that not only has Honda taken over the top spot, but that Ford is making fast and solid gains in building bridges with its suppliers.

Why does that matter?  “Because suppliers normally give a lot of benefits to their best customers,” explains Planning Perspectives’ President John Henke.  A supplier that feels it has a solid and long-lasting relationship to an automaker will not only accept “a premium in pricing,” but also bring that automaker the sort of cutting-edge features and technology that can provide a much-needed advantage in today’s highly-competitive auto market. (more…)

Q&A: GM’s Susan Docherty

“We have no reason to be cocky or arrogant anymore.”

by on Apr.13, 2009

"We have no reason to be cocky or arrogant anymore," says GM Vice President Susan Docherty.

"We have no reason to be cocky or arrogant anymore," says GM Vice President Susan Docherty.

She may have one of the toughest jobs at General Motors.  As the new vice president of the BPG Group, Susan Docherty has to find a way to take three troubled brands, Buick, Pontiac and GMC truck, and stitch them into a cohesive – and profitable – distribution channel. BPG is one of the three remaining pillars of the downsized General Motors, the other two channels being Chevrolet and Cadillac. It’s also one that critics say the company can no longer afford.

Company insiders say that if anyone is up to the challenge, it’s the 45-year-old Docherty, whose most recent assignment put her in charge of GM’s Western Region. It was a humbling experience, considering that in states like California, the automaker is barely an also-ran in an import-dominated market.

TheDetroitBureau’s Paul A. Eisenstein caught up with Docherty following her appearance at the New York International Auto Show, where GMC unveiled its critical new crossover, the Terrain.

TDB: General Motors has been making some major changes since it began asking for a government bailout.

Docherty: There’s an impression people have that we just got religion. A lot of what’s happening was already in place even before we went to Washington (last year) to ask for help. There’s no doubt in my mind that we’re not the same old GM. But with the spotlight on us, it’s forced us to make decisions we might have wanted to years ago. We’ve made more changes, at GM, in the last eight months than we did in the last eight years. But change is not new for us. This isn’t our first rodeo.