February 27, 2021

Car Sales Show Restrained Growth

 DETROIT — Automakers said Tuesday that sales growth of new vehicles in the United States rose in July but continued to be hampered by economic concerns and low inventories of many Japanese models.

 Sales fell 28.4 percent last month at Honda and 22.7 percent at Toyota compared with July 2010. Both companies have been struggling to meet demand because of parts shortages caused by the earthquake and tsunami that struck Japan in March.

Most other major carmakers reported modest increases, including gains of 7.6 percent for General Motors and 6.1 percent for the Ford Motor Company. Nissan, whose production was not significantly disrupted, said sales were up 2.7 percent.

Chrysler’s sales rose 20.1 percent “in a market that remains tougher than a cheap steak,” its head of United States sales, Reid Bigland, said in a statement.

“The recovery is clearly in a stall mode,” said Paul Ballew, the chief economist at Nationwide Insurance and a former G.M. sales analyst. “It’s hard to see sales sprinting forward without some help on job and income growth. There’s a lot of wind that’s really out of the consumer’s sails right now.”

Over all, automakers estimated that the industry’s seasonally adjusted, annualized sales rate climbed to about 12 million in July, from a rate of about 11.5 million the previous month and a year earlier.

 “The auto industry is having a difficult time shaking off adversity, as vehicle sales start the second half of the year better than June but not as strong as many people had hoped,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “A recovery pattern is still expected, but the pace could be in question.”

 Increases in unemployment and economic fears caused by the debt ceiling debate in Washington were among the factors deterring car shoppers in July, analysts said. Even though Congressional leaders reached a last-minute deal to avoid defaulting, the issue will continue to cast a shadow on auto sales, predicted John Hoffecker, a managing director of the restructuring firm AlixPartners.

“What it brought to the forefront in many people’s minds is the shape the country is in, and raising the ceiling does not solve those concerns,” Mr. Hoffecker said. “We don’t see a significant pickup happening between now and the end of the year.”

 In addition, the Japanese automakers still are working to replenish inventories of popular vehicles like the Honda Accord and Toyota Camry after production was slowed in March. Honda has said it expected plants to be essentially back to normal this month, and Toyota has said full output would resume by September.

 “The Japanese companies should start to regain some of the market share lost over the past four months as production and inventory gradually improve,” Peter Nesvold, an analyst with Jefferies and Company, wrote in a report last week. Mr. Nesvold forecast that September would be the first month since April in which sales reflected true demand rather than low inventories.

 Meanwhile, Toyota and Honda have been piling on discounts in the hopes of encouraging consumers to make a purchase. Incentives on Japanese vehicles were 24.5 percent higher in July than in June, to an average of nearly $2,000 a vehicle, according to the car-buying advice site Edmunds.com. Incentives on all vehicles averaged 7.6 percent higher in July.

 “With production working its way back to normal, the Japanese are making a strong play for their lost market share, and American automakers may need to kick in more incentives as they fight for more consumers,” said Jessica Caldwell, a senior analyst at Edmunds.com.

 Ford and G.M. have also been affected by inventory problems. Their most fuel-efficient models, including the Ford Focus and Chevrolet Cruze compact cars, have become scarce as consumers seek relief from high gas prices, but the companies have been reluctant to add extra shifts given the fragile state of the economy. Instead, they are trying to bolster output through lower-cost, less-permanent actions, such as running some plants on overtime.

“We’re shipping everything we can to meet consumer demand,” said Ken Czubay, Ford’s vice president for United States marketing, sales and service. “But consumers are telling us they want two more than we can produce. We’re running flat-out.”

At the same time, supplies of pickup trucks and larger vehicles have been ballooning, creating concerns among analysts that the companies will start slashing prices to keep dealer lots from becoming too crowded.

The uncertain sales environment cut into the second-quarter earnings reported by Ford and Chrysler last week. G.M. was expected to report a second-quarter profit on Thursday. 

Article source: http://feeds.nytimes.com/click.phdo?i=d533c4a678f92912ff92db083521a8c6

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