September auto sales show stop-start recovery

U.S. auto sales slipped 4 percent in September from August, showing how the market for new cars and trucks remains stuck in a slow-motion recovery nearly two full years after hitting bottom.

Ford Motor Co (F.N), Chrysler LLC, Nissan Motor Co (7201.T) and Hyundai Motor Co (005380.KS) all gained market share in September as stable gasoline prices drove sales of trucks and SUVs back above 50 percent of overall U.S. vehicle sales for the first time this year.

The results pointed to a continuing but slow recovery with consumers still too concerned about housing prices and employment prospects to begin buying vehicles at anything near the historical rate for the U.S. market.

"Consumers are sending a very clear message that they will be cautious with their spending," GM sales chief Don Johnson told reporters and analysts.

On the annualized basis tracked by analysts, U.S. auto sales have trended gradually higher from 11 million in the first quarter to 11.3 million in the second quarter.

Including September's tally, that measure of sales rose to 11.7 million in the third quarter, still well below the rate of recovery that most analysts had predicted heading into 2010 after 2009's crushing downturn.

"The economy does remain hampered by the negative mix of jobs, housing and credit and it's really that troika of challenges which we think will improve gradually," said Ellen Hughes-Cromwick, Ford's chief economist.

Overall, September auto sales were up nearly 29 percent from a year earlier when inventories had been depleted by the expiration of the government's cash-for-clunkers sales incentives.

Analysts and automakers said the result pointed toward more of the same slow but steady progress in the months ahead.

Brett Hoselton, analyst with KeyBanc Capital Markets, said a number of indicators point to continued sales growth.

One of those: Americans are scrapping old cars at a rate of about 12.4 million per year and the number of cars on the road is shrinking, he said.

Most analysts see that as an unsustainable trend given just the projected population growth in the United States, now the No. 2 car market behind China.

"We remain confident that the light vehicle (sales rate) should continue to improve," Hoselton said in a note for clients.

GM IN FOCUS

Chrysler posted the largest year-on-year sales gain at 61 percent. That was followed by Hyundai (+48 percent), Ford (+46 percent) and Nissan (+34 percent).

Toyota (+17 percent) and Honda (+26 percent) both saw sales rise at a lower rate than the rest of the market.

GM, which faces a crucial test with an initial public offering of stock expected in November, had the slowest sales growth of any of the major automakers at 11 percent.

GM was restructured in a bankruptcy funded by the Obama administration and the government is counting on an IPO to reduce its nearly 61 percent stake in the automaker.

With GM and Ford both profitable in a still-weak market, the automakers have not resorted to the kind of aggressive discounting to jump-start sales that had been their established response to signs of a slowdown earlier this decade.

At GM, executives said, that has meant rising average sale prices on vehicles, lower sales incentives and a commitment to keep inventories lean.

GM spent about $3,300 in incentives per vehicle on average to close sales in September. That represented a discount of about 10.7 percent of the average cost -- in line with the industry's average.

"It's the economic recovery that has to drive our sales," he said. "Is it slower than everyone would like? Potentially."

GM said 25 percent of its sales in September went to fleet operators including rental car companies. The share at Ford was 29 percent.

Chrysler, which has relied heavily on lower-margin fleet sales, does not disclose its share of such sales.

For Chrysler, the first real test of the revamped company under Fiat comes in the current quarter when a range of redesigned vehicles, including a new "200" sedan to replace the Sebring, begin to arrive in showrooms.

One standout trend in September was a jump in sales of the full-size pickup trucks, watched as a harbinger of business investment.

Sales for pickup trucks led by Ford's F-Series were up almost 42 percent from a year earlier.

Industry-wide sales for September faced an unusually easy comparison to 2009 when the auto sales rate was an anemic 9.2 million vehicles. For September 2010, the annualized sales rate rose to 11.76 million vehicles.