February appears to be shaping up as another lacklustre month for US new vehicle sales, particularly for industry leaders General Motors and Ford, which some analysts predict may cut production again to alleviate a backlog of vehicles, according to an Associated Press (AP) report.
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“Unless sales close the month extremely strong, we seem to be in for another sub-normal month in February,” Burnham Securities analyst David Healy, whose forecast calls for flat year-over-year sales industry-wide in February, told AP.
According to the Associated Press, Healy and two other industry analysts said in research reports that, in a pattern that has repeated itself in recent months, GM and Ford are likely are to report a decline in business, while Chrysler Group, Toyota and Nissan are expected to post increases.
Merrill Lynch’s John Casesa reportedly forecast a seasonally adjusted annual sales rate of 16.4 million units in February, which would be up slightly from January’s 16.2 million rate but off a little from the 16.5 million rate of a year ago.
Full-year sales for 2004 were about 17 million, AP noted.
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By GlobalDataAccording to the news agency, Chris Ceraso of Credit Suisse First Boston expects an annualised selling rate of between 16.3 million and 16.6 million units, but said the most important news when car makers report February sales on Tuesday may be the second-quarter production schedules for GM and Ford.
Despite plans to produce fewer vehicles in the first quarter of 2005 versus a year ago, GM and Ford still are saddled with above-normal vehicle inventories, the analysts reportedly said.
The Associated Press said GM and Ford both got off to sluggish starts in January, which they attributed to harsh winter weather in much of the country and fallout from exceptionally strong December sales – but sales this month don’t seem to have gained much, if any, momentum.
Ceraso reportedly said he’s looking for further production cuts at GM and Ford in the second quarter, which might provide “the light at the end of the tunnel of bloated inventories” but would hurt profits.
AP noted that, in an unusual move for the middle of a model year, GM this month slashed prices on its mid-size sport utility vehicles, which compete in one of the industry’s toughest segments and saw sales slump dramatically last month.
Casesa told the Associated Press that car sales could be a bright spot for Detroit car makers, given the new Ford Five Hundred and Mercury Montego, higher incentives on the Pontiac G6 and Buick LaCrosse and continued success of the Chrysler 300.
