GM loses as Toyota rebounds
The Japanese automaker promised an aggressive sales effort once it got back on its feet, and it began in January.
By John Rosevear
So much for concerns about auto sales: U.S. sales of cars and light trucks (pickups and SUVs) were up 11% in January over year-ago numbers, a strong result that suggests economic momentum is increasing. That result was good enough to put the annualized sales pace at 14.1 million, the highest monthly mark posted since the "Cash for Clunkers"-fueled sales boomlet in August of 2009.
Buried in the numbers are several trends worth noting, starting with a big one: After two years of troubles, Toyota (TM) is finally starting to roar back -- and General Motors (GM) has already lost some ground.
A troubling note for GM
GM's sales were down 6% over (admittedly strong) year-ago figures, and that was despite an unusually hefty proportion of fleet sales, which made up 30% of the company's total for the month.
That's an eyebrow-raiser. Low-margin fleet sales were a bane of bad old Detroit, when the Big Three used them as a crutch to keep production high as consumer interest in their products waned. That history means that any jump in Detroit's fleet numbers (and this was a jump; an average around 25% has been more typical recently, and is regarded as healthy) is going to be viewed skeptically by analysts.
But this jump shouldn't be cause for too much concern yet: As Edmunds analyst Michelle Krebs points out, January is typically a high month for fleet sales. Ford's (F) fleet numbers for the month were unusually high as well, though the Blue Oval managed an overall sales gain for the month. And GM executives, like their Ford counterparts, did say that they expect that percentage to fall back to normal ranges in coming months.
But it's a telling sign that the General posted a sales decline despite the fleet-sales cushion. Sales of both Buick and Cadillac brand vehicles were off sharply, as both brands are waiting on fresh products. Chevy did better, with good results driven by strong sales of one of GM's best new cars, the Cruze compact, and one of its golden-oldies, the big Suburban SUV. The Camaro, another of GM's more recent offerings, also saw strong sales on the month.
Expect that to be a theme in coming months. GM's efforts to overhaul its product line came to a crashing halt during the company's downward spiral, and it lost substantial ground to competitors like Ford who were able to continue investing in new product programs during the downturn. GM is now moving aggressively to make up for lost time, but it takes time to develop new vehicles -- quite a lot of time. Approximately 30 months or so is typical for a new-car program, and much of GM's pre-bankruptcy work had to be torn up and restarted from scratch, as the competitive landscape had shifted in the interim.
GM's new cars and trucks are coming, and signs so far suggest that they'll be quite competitive. But they won't be rolling out in quantity until 2013 and 2014. In the interim, strong competitors will be able to gain sales ground against the general.
Strong competitors, for instance, like Toyota.
Godzilla's back, and boy is he mad
There was never any question that Toyota was going to be very aggressive in winning back lost market share once the company got its production issues straightened out, and January saw the beginnings of that effort. Toyota's sales were up 7.5% on the month, a result comparable to Ford's, but driven by somewhat different segments of the market.
While Ford saw success with its compact Focus and small SUVs, Toyota posted an eye-popping year-over-year gain of almost 56% for its perennial class-leading Camry, and a 79% gain for its big Avalon sedan. Prius sales were solid, too, up almost 9%, but sales of the compact Corolla were down significantly. The Corolla sales may be decreasing due in part to continuing inventory challenges during the first part of the month, and possibly due to the strength of the smaller Yaris, which posted a 64% gain over low year-ago numbers.
Honda (HMC) also posted a solid gain on the month -- just shy of 9% -- as it continued to try to get its own supply lines back to something like normal. Its pace was led by big gains for the Civic compact, continuing the theme seen at Ford -- but it was also something of a surprise, as the current Civic has been widely panned by reviewers.
The upshot: Now it gets complicated
2012 is already shaping up as a rough battle for market share. Spending on "incentives" -- those cash-back and zero-percent financing deals funded by automakers to juice sales -- could rise sharply as the battle heats up. Toyota has already signaled that they will spend heavily to regain lost share, and the other automakers may be forced to spend to keep up.
A price war won't help anyone's margins, of course, and with the big global automakers already squeezed by difficult economic conditions overseas, a reduction in U.S. profits could hurt. Is that where things are going? Keep an eye on this space.
Fool contributor John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors, as well as creating a synthetic long position in Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Check out the class action lawsuits from the Prius buyers. These are not 'lawyer represented' plaintiffs. But customers representing themselves in a court of law. Seems the manufacturer mis-represented the fuel mileage savings with these vehicles. Ouch!
They can keep their cars for all I care, I like GMYou and the Government - That's where a good portion of their sales are coming from. I'm not pronouncing them dead just yet but - Give them another ten years and we will probably see them back in trouble. As for their stock - It's only for fools and the government to hold on to.
Hey Nufsaid1....No Ouch! You are confusing unhappy Honda hybrid owners with thrilled Prius buyers. We get 48-50 on our 2011 and L-O-V-E it but I would not recommend you go out and buy one. That may cause a Prius price spike when I go to replace this one. Every 3 weeks when its time to fill up for less than $30 I smile and think to myself...best vehicle purchase ever. Nah...Prius owners are not out to sue....we are more apt to hug the manufacturer.
21 people love paying $4/Gal at the pump while getting only 15 mpg to help support Arab oil sheiks...
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Remy Cointreau says it was 'adversely affected' by China's anti-extravagance policy.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.