Ford, GM, Hyundai up on healthy sales of fuel-efficient models

Demand for big SUVs drops as gas prices rise

General Motors, Ford Motor Co. and Hyundai Motor Co. -- helped by strong retail volume and new fuel-efficient models -- posted increases in April sales today.

GM recorded a 27-percent gain, spurred by a 50 percent jump in demand for cars including the new Chevrolet Cruze. But large pickups rose just 2 percent, and sales of some of the automaker's biggest SUVs slumped.

Ford said sales rose 13 percent last month. At the Ford division, volume jumped 24 percent on higher sales of F-Series pickups and the new Explorer crossover. Both models now offer more fuel-efficient powertrains. But at Lincoln, demand eased 1 percent, reflecting a drop in crossover and large SUV sales.

Hyundai, propelled by the new Elantra small car, said sales rose 40 percent to set an April record of 61,754 units.The Korean automaker said it expected its U.S. retail market share to hit a record 5.7 percent for the month.

The results from the first automakers to report mark the first indication of how the industry fared in a month where the steady recovery was tested by rising gasoline prices and dwindling inventories resulting from the March earthquake in Japan. U.S. auto sales were up 20 percent through March.


Nissan said higher sales of fuel-efficient models such as the Altima, Sentra, Leaf and Rogue offset a drop in truck and SUV demand and pushed its overall April sales up 12 percent.

“Consumers are continuing to rethink their vehicle choice," said Don Johnson, head of GM’s U.S. sales operations. “A lot of sales continue to go into the compact car segment as well as the compact crossover segment."

Sales of the Cruze compact topped 25,000 units in April, with retail volume nearly triple the car it replaced, the Cobalt, from a year earlier.

GM said Chevrolet, GMC and Cadillac each set April total and retail sales records for crossover sales, led by a 49-percent increase in combined retail sales of the Chevy Equinox, GMC Terrain and Cadillac SRX.

But demand for the Chevrolet Suburban dropped 31 percent last month. Chevy Tahoe sales fell 16 percent.

GM said its incentives per vehicle dropped by about $400 from March to April, without providing specifics. Truecar.com, an online shopping site, estimated GM’s incentives averaged $3,524 last month, up about 6.3 percent from the previous month and up 5.8 percent from a year ago.

It was the eighth consecutive monthly increase for GM and its biggest gain since a 46 percent advance in February.

Sales outlook
The average April sales forecast of 40 economists polled by Reuters was 13 million vehicles on a seasonally adjusted annualized basis, which would be a 16 percent rise from an 11.2 million-rate in April 2010 and on par with March.

“There’s a recovery going on in the auto industry and the economy,” Ford sales analyst George Pipas said Monday. “There are more people working today than 2 or 3 months ago, and there’s more income.”
But rising gasoline prices and model shortages stemming from the March earthquake in Japan are expected to dampen sales in coming months.

Barclays analyst Brian Johnson this week cut his 2011 sales forecast by 300,000 units to 13.2 million, still among the highest estimates among analysts.

Truecar.com expects April sales to hit 1.145 million units, up 17 percent from a year earlier.
Discounts are forecast to drop 11 percent from April 2010 to $2,386 per vehicle last month, Truecar said.

“With inventory dwindling, automakers didn’t have to spend as much money to move metal,” TrueCar.com analyst Kristen Andersson said. “Incentive spending was at its lowest level since January 2006.”

J.D. Power and Associates said new-vehicle retail sales continued to perform well in the second half of April despite growing inventory concerns, specifically compact vehicle supplies.

Power expects the retail selling rate in April to reach 11.1 million units, while the SAAR for all light-vehicle sales is expected to hit 13.1 million units.

“Increasing gas prices and shortages in vehicle inventory have yet to trump the overall recovery that has been progressing since the fall of 2010,” said Jeff Schuster, head of global forecasting at J.D. Power and Associates.

“However, looking at the remainder of the year, growing uncertainty about gas prices and stockpiles is increasing the risk that that the industry may not reach the expected 13 million-unit level for total light-vehicle sales.”

Gas prices
Average U.S. gas prices -- $3.80 a gallon -- are higher at this point in the year than they were in 2008, when a surge in fuel prices sent industry sales tumbling.

But U.S. car shoppers are responding to higher gas prices by choosing smaller vehicles and engines.
Ford says nearly 50 percent of the F-150 pickups it has sold in recent weeks and months have been equipped with one of 2 new V-6 engines now offered. In April, V6-equipped F-150s accounted for 50 percent of all 2011 F-150 retail sales, up from 40 percent in March.

During the first 24 days of April, retail sales of small cars represented 23.9 percent of all light vehicle sales, up from 21 percent during the same period in 2010, Ford said.

Overall, retail sales of cars accounted for 52.9 percent of industry sales, up from 51.7 percent during the first 24 days of April 2010.

Minivans and pickups lost ground industry-wide in April, Ford says.

Healthy truck demand
Still, truck demand has remained resilient despite the surge gas prices.

Sales of the redesigned Porsche Cayenne SUV have surged 91 percent this year. Land Rover sales are up 19 percent.

Ford sold 45,435 F-Series pickups in April, an increase of 11 percent from a year ago, and sales are up 20 percent year-to-date. Ford Expedition SUV sales rose 8 percent last month and are up 15 percent for the year.

But in April, Cadillac Escalade demand slumped 25 percent and Yukon sales eased 4 percent, GM said today. GMC Yukon SUV demand is up 40 percent through April.

Analysts say wealthy consumers and small business owners are behind the rise in truck and SUV sales.
“Rising gas prices are pressuring truck sales, but the impact is more manageable this time around,” Johnson said in a report Monday.

“We estimate less share loss than in 2008 for large trucks as most discretionary buyers have already moved away from the segment.”

Dealers are also bracing for a shortage of models built in Japan.

Honda Motor Co. on Monday became the latest Japanese automaker to warn of more inventory shortages following the March earthquake in Japan. The quake, tsunami and nuclear crisis have disrupted parts production across Japan, forcing Honda, Toyota and other automakers to curtail output.

The inventory shortfall is expected to become more acute with smaller models such as the Honda Fit and Toyota Prius hybrid that are only assembled in Japan.

David Phillips Automotive News -- May 3, 2011 - 11:00 am ET