The auto sector is the last of the deeply impacted sectors that have yet to show some encouraging signs. The inventory correction appears over and plants are being restarted. And banks are lending a bit more freely, there is clearly pent-up demand and the cash-for-clunker program will start shortly. Only major caveat: personal income is very weak and consumers are deleveraging.
The beleaguered auto industry could see signs of strengthening demand when auto makers report U.S. sales for June on Wednesday, according to auto makers and analysts.
Buoyed by fewer jobless claims and improved consumer confidence, annualized U.S. sales could hit 10 million this month for the first time in 2009, Ford Motor Co. analyst George Pipas said on Monday. The deep discounts that General Motors Corp. and Chrysler Group LLC have offered to boost sales are also likely to bolster June sales.
Those factors suggest "the worst is behind us," Mr. Pipas said. "Even if sales fail to hit the 10 million milestone, we’re still not slipping back." A GM spokesman also said an annualized 10 million sales rate is possible for June.
J.D. Power and Associates predicts annualized June sales of 10.3 million new cars and trucks, up from 9.9 million in May, while Edmunds.com expects the sales rate to top 10 million, though overall sales will still be 25% lower than a year ago.(…)
Underscoring its rosier outlook, Ford said it is now planning production for the third quarter that is 5.4% above its most recent quarterly target.
The company said it would build 485,000 new cars and light trucks during the quarter ending Sept. 30, a 16% increase over the 418,000 produced in the year-ago quarter. It is the second time Ford raised its third-quarter output target.
Ford said earlier this month that it would raise production 10%, to produce 150,000 cars and 310,000 trucks during the quarter. Monday’s revised target adds another 15,000 cars and 10,000 trucks. It would be the first time in two years that Ford’s quarterly output would be increased year-over-year, and comes amid fresh signs that the downturn in U.S. auto sales may be abating.
"We decided last year to break the mold and stop over producing," said Mark Fields, Ford’s president of the Americas. "Our inventory is now down and with demand up, driven by our new products, we are in the position to increase production again. There is definitely a cessation in the deterioration of the economy."
Ford’s increased output comes as GM and Chrysler are still scrambling to adjust output to lower demand while dealing with bankruptcy-induced reorganizations.(…)
Chrysler kept all of its U.S. plants idled during the past two months as it restructured. The company resumed production at seven of its U.S. plants on Monday.(…)
Ford, which unlike GM and Chrysler has not needed bailout loans from the government, will likely report a decline in June sales of less than 20% from a year ago, he said. Most auto makers have suffered year-over-year monthly declines of 30% or higher this year.
June sales also got a boost as hundreds of dealers who are being forced to close their Chrysler franchises sold off their inventory at deep discounts. GM’s Pontiac brand, which is being shuttered as part of the auto maker’s restructuring, has also slashed prices in recent weeks to clear its stock.
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