U.S. government shutdown dampens October car sales

Reuters

* GM beats expectations, other major automakers miss

* Truck sales still strong but growth slows

* Detroit automakers post double-digit gains

* 1.2 million industry total falls short of forecasts

* Analysts remain mixed on longer-term outlook

By Bernie Woodall and Ben Klayman

DETROIT, Nov 1 (Reuters) - The 16-day U.S. governmentshutdown in early October appeared to dampen consumers' appetitefor new cars, as seven of the top eight automakers reportingmonthly sales on Friday missed analysts' expectations.

Industry sales in October rose 10.6 percent to 1,208,036vehicles, according to industry research firm Autodata. Analystshad expected a 12 percent increase.

Sales for the three Detroit-based automakers, driven partlyby steady demand for full-size pickup trucks, rose by doubledigits from a year earlier, but only General Motors Co beat expectations.

October sales dipped to an annual rate of 15.23 millionvehicles, according to Autodata, the lowest rate since April.

The weaker-than-expected sales rate "was primarily driven bythe government shutdown impacting consumer sentiment through thefirst half of the month," Morgan Stanley analyst Adam Jonas saidon Friday in a briefing note to clients.

Analysts had forecast stronger performances in October fromFord Motor Co and Chrysler Group LLC, as well asfrom Toyota Motor Corp, Honda Motor Co, NissanMotor Co, Hyundai Motor Co and VolkswagenAG.

GM said October sales climbed nearly 16 percent to 226,402vehicles from 195,764 a year ago, with all four GM brandsreporting year-to-year increases, led by Buick, up 31 percent.Analysts polled by Thomson Reuters, on average, expected GMsales of 211,563.

Results at Ford and Chrysler narrowly missed analysts'expectations, as did those at Toyota, Honda and Nissan.

Ford said October U.S. sales increased 14 percent to 191,985vehicles, from 168,456 a year earlier. Ford and Lincoln brandsales both rose during the month. Analysts expected 194,301.

Chrysler reported October sales of 140,083, up 11 percentfrom 126,185 a year ago. Analysts expected 143,536.

Toyota sales rose 8.8 percent to 168,976 vehicles, whileHonda was up 7.1 percent to 114,538 and Nissan was up 14.2percent to 91,018. Analysts expected 176,815 at Toyota, 119,823at Honda and 93,632 at Nissan.

Hyundai Motor Co said group sales in the UnitedStates rose 0.6 percent to 93,309. Hyundai brand sales climbed6.5 percent to 53,555 while Kia sales dropped 6.4 percent to39,754.

Analysts said vehicle demand began to pick up after thegovernment resumed working at mid-month.

"The market seemed to respond pretty quickly and the cadence(of sales) seemed to improve," said Itay Michaeli, analyst atCiti Research. "That, I think, is a testament to some of thepent-up demand out there."

Added GM's chief economist Mustafa Mohatarem: "It's likewhat we've seen with oil prices in recent years where people aregetting accustomed to some of the noise coming out ofWashington. It may change people's perspective on exactly whento pull the trigger on buying a new vehicle, but we're notseeing much of an impact on the longer-term trend, which hasbeen very positive."

TRUCKS STRONG

Sales of full-size pickups, buoyed by a steady housingmarket and lower gasoline prices, continued to show strength inOctober, although their torrid year-long pace slowed a bit.

Ford's F-series was up 13 percent for the month and up 20percent for the year to date, while Chrysler's Ram was up 18percent for the month and 23 percent for the year to date. TheChevrolet Silverado was up 10 percent for the month and 20percent for the year.

Average transaction prices for all full-size trucks inOctober jumped more than 5 percentage points from a year ago, to$39,189, according to Kelley Blue Book.

"The truck segment will remain hotly contested through therest of this year," said analyst Alec Gutierrez of Kelley BlueBook, with GM spending less than Ford and Chrysler to promoteits Silverado and Sierra.

Volkswagen AG's U.S. subsidiary said VW brandsales fell 18 percent to 28,129 vehicles. The German automaker'supscale Audi brand reported record sales of 13,001, up 11percent, with Porsche boosting sales 11 percent to 3,562. Groupsales of 44,692 were down 9 percent from a year ago, missinganalysts' expectations of 48,654.

Consumer demand for electrified vehicles remain mixed.October sales of GM's Chevrolet Volt dropped 32 percent to2,022, while Nissan Leaf climbed 27 percent to 2,002.

With the U.S. economy still in low gear and the next roundof congressional budget and debt negotiations looming in early2014, analysts remain mixed in their longer-range outlook.

"If we could ever get some strong economic footing in thiscountry to drive lower unemployment (and higher consumer)confidence, I think we've got a dam that's still waiting toburst," said Karl Brauer of Kelley Blue Book.

GM shares were up 1.2 percent at $37.38 on Friday afternoonon the New York Stock Exchange, while Ford shares were down 1.5percent at $16.86.

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