September Auto Sales Weaken And Likely To Remain Soft For Remainder Of 2009

The U.S. auto industry witnessed waning auto sales during September as the U.S. Government’s “Cash for Clunkers” program (hereafter, CFC) ended its run in August. The CFC was a $3 billion cash incentive program, introduced in late July and ended August 24. The program allowed consumers to trade in their old gas-guzzling cars and trucks with a mileage of 18 miles per gallon or less for a value of up to $3,500-$4,500. The CFC drained out auto dealers’ inventories and sucked up potential September sales.

Overall industry sales went down 26% year-over-year to 742,099 vehicles. This made September the worst month since February. Sales of cars and light trucks dipped 25% to 555,798 vehicles.

Korea’s Hyundai Motor was the only automaker to report a sales gain in September. The automaker’s sales surged 27% amidst slowing market for delivering low-cost and high-quality vehicles. Two of its models — Sonata and Elantra — were among the top-20 selling vehicles by volume.

Among the U.S. automakers, the Ford Motor Co. (F) reported the best results. The automaker’s sales dipped only 5% despite low inventories and reduced incentives for buyers. The Ford F Series Pickup ranked first in the top-20 selling models. Other Ford models that featured up in the list are Fusion, Escape and Focus.

Other Detroit automakers were hit the hardest during the month. Sales for General Motors and Chrysler plunged 45% and 42%, respectively. Sales of both the automakers suffered due to a weak product portfolio.

Meanwhile, U.S. sales for the three major Japanese automakers — Toyota (TM), Honda (HMC) and Nissan (NSANY.PK) — succumbed to the short-lived CFC boom. Their sales were lower in September after the substantial spurt in August.

Toyota Motors revealed a 13% fall in sales during the month. The automaker had the largest number of Clunkers-related sales. Toyota Camry ranked second in the top-20 selling models. Other models that showed up in the list are Corolla, RAV4 and Prius.

Honda Motor Co. disappointed with a 20% drop in sales compared to its best performance in August among the three major Japanese automakers.

Nissan Motor recorded a 7% decrease in sales. This was worse than its sales decline in August.

We believe U.S. automotive market will remain spare for the remainder of 2009. Inventories need to be revamped through the ramping up of production. It will not be possible for the industry to witness any major breakthrough unless another CFC kicks in.

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