In the last few months, we've seen some signs that auto sales in the U.S. are finally starting to pick up. While sales rates have remained well below pre-2008 norms, the trend is finally starting to move in the right direction, suggesting that perhaps consumers have finally started spending again.
Or should I say the trend was starting to move up? Early data for January is coming in, and while some analysts are predicting a continuation of that trend, others are seeing early signs of a significant drop. Either way, it's looking like the market is getting shaken up a bit -- and some automakers, like Ford (NYSE: F ) , may be doing quite a bit better than others.
What's going on?
Two tales of one market, told by two analysts
We'll start with the worst case. Early data from Edmunds suggests that the "SAAR" -- the annualized figure widely used as a measure of the U.S. auto sales pace -- has dropped significantly, from about 13.5 million in December to around 12.1 million so far in January.
That differs significantly from predictions made by Kelley Blue Book, which has forecast a SAAR in the range of 13.2 million for January. That would represent a year-over-year gain of nearly 10%, which would be in line with the increases we've seen in recent months.
So, are Edmunds' numbers just statistical noise, or an early warning of a major trend shift? It's possible there's some "noise" in there, though it might not be particularly reassuring. Edmunds' Jeremy Anwyl suggests two possible reasons for the drop in sales totals seen by his firm:
- Sales "slipped" back into 2011. Some dealers, under pressure to report strong year-end sales totals for 2011, may have counted sales made in the first weekend of 2012 as December 2011 sales. That would make mid-month totals look lower than they should be, but wouldn't be indicative of a new trend in and of itself.
- A bursting bubble. It's possible that the higher sales seen in November and December were "a limited boost from buyers returning to market after the difficult conditions we saw over the summer." As Anwyl put it, that the sales boost was driven by bargain-hunters taking advantage of end-of-model-year deals and incentives.
So, which was it? It could be both. At minimum, some points in the data argue strongly for the first possibility. For instance, Edmunds saw a big drop in sales for both BMW and Mercedes in January versus December -- with the two luxury marques competing fiercely at year-end for top-dog status, it's very possible that some of their dealers chose to include early January sales as part of their December totals.
But the numbers from Kelley Blue Book suggest some different trends.
Strength for Ford, a decline for GM?
As I said above, analysts at Kelley Blue Book are calling for a 9.8% year-over-year increase in U.S. auto sales in January. Interestingly, they see strong gains for some automakers, and declines elsewhere:
- General Motors (NYSE: GM ) sales will be down 5.4% year-over-year, the Blue Bookers say, despite strong results from pickups, the Chevy Cruze compact, and Chevy's Equinox "crossover" SUV. Edmunds expects only a tiny drop for GM, though the General's sales were relatively subdued in December.
- They predict that Ford, on the other hand, will post a 14.1% gain on the strength of strong sales of the Fiesta, the Focus, and the F-series pickups. (They also predict that strong interest in the redesigned Fusion "will help keep Ford's sales momentum strong" during the month. That would be quite a trick, since the new Fusion won't arrive at dealers until later this year.) Edmunds, on the other hand, sees a small drop in retail market share for the Blue Oval in January, versus the 0.6% gain expected by Kelley.
- Toyota (NYSE: TM ) and Honda (NYSE: HMC ) will both post small year-over-year gains, Kelley predicts, as the companies rebound from the production disruptions that followed the Japanese tsunami and Thai floods in 2011. Kelley is seeing "strong signals of Toyota's expected rebound" in light of increased interest in the brand by consumers using the company's website. But that is unlikely to translate into a market share gain for Toyota, at least on a year-over-year basis, say both Kelley and Edmunds.
- Both predict major gains for Hyundai (OTC: HYMTF.PK) and its corporate cousin Kia.
The upshot: Who to believe?
So who's right? If I had to, I'd bet on Edmunds' pretty solid track record, and on the company's more reliable analysts. But I wouldn't bet too much, as their prediction for January would represent a pretty dramatic reversal of recent trends that doesn't (yet) seem to be supported by other economic indicators. One thing is clear: We'll know a lot more when official numbers are released next week. Investors stay tuned.
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