U.S. auto sales seen stalling in September after torrid summer

Reuters
Chevrolet Silverado pickup trucks are seen in Gaithersburg, Maryland
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Chevrolet Silverado pick up trucks are seen in Gaithersburg, Maryland May 1, 2013. REUTERS/Gary Cameron

DETROIT (Reuters) - The U.S. auto industry's sizzling summer pace stalled in September for the first year-on-year sales decline in more than two years as the month suffered because part of the Labor Day shopping weekend landed in August and there were two fewer days than last year to buy.

Analysts who closely watch the auto industry predict September's annual sales rate will be in a range of 15.2 million to 15.7 million on an annualized basis. The lower end of that range would fall short of summer's torrid pace, which included a 16 million rate in August that marked the strongest performance in nearly six years.

Despite September's expected sales decline of 2 percent to 5 percent, analysts expect the industry's momentum - it has largely outperformed the broader economy - to continue in the fourth quarter and into 2014 as the factors driving demand still remain in place.

"Consumer confidence is relatively high, unemployment ticked down to 7.3 percent in August, and we continue to see increases in home prices and construction activity," Jefferies analyst Elaine Kwei said in a research note.

Auto sales will be reported by major automakers on Tuesday. Because they are seen as an early monthly indicator of consumer spending, analysts will be watching closely to see if consumer sentiment is suffering amid talk of a federal government shutdown.

U.S. consumer sentiment slid in September to its lowest level in five months as Americans expect higher interest rates and sluggish economic growth ahead, according to the Thomson Reuters/University of Michigan survey.

However, the federal government also said that U.S. household spending rose 0.3 percent in August from July. Incomes were buoyed by solid wage gains, a sign that momentum could be growing in the U.S. economy despite months of harsh government austerity.

TrueCar.com, RBC Capital Markets, Sterne Agee, UBS and Barclays all expect September auto sales to show a annualized selling rate of 15.4 million vehicles, or about 1.15 million in monthly sales, down about 3 percent.

That would be below last September's 1.19 million in U.S. sales. Edmunds.com said it would be the first time since June 2011 that a month did not show a year-on-year sales gain.

Also working against September sales in comparison with a year ago is the fact that the Labor Day weekend was shared with August, adding to that month's sales at the expense of September's. Barclays analyst Brian Johnson called the expected September sales decline "nothing more than noise."

"Labor Day sales clearly pulled ahead from September volume and resulted in a lackluster month," TrueCar analyst Jesse Toprak said. "The uncertainty in the financial markets also finally caught up with auto sales, causing some hesitation for big-ticket items purchases."

Due in large part to the two fewer selling days, most of the biggest automakers will show a decline or only marginal gains in September sales, analysts said.

General Motors Co (GM), No. 1 in U.S. sales, will show a decline of 1 percent to 7 percent, analysts said.

Analysts were mixed on the September performance of Toyota Motor Co . Kelley Blue Book predicted the top Japanese automaker will report a 3-percent sales increase, but most analysts had the company's sales falling in a range of 1 percent to 7 percent.

Analyst forecasts were also mixed for Ford Motor Co's (NYS:F) September sales, with estimates ranging from a decline of 3 percent to a gain of 5 percent. Ford in the past two months has ranked No. 3 in U.S. auto sales.

(Reporting by Bernie Woodall; Editing by Nick Zieminski)

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