September 2007 U.S.Auto Sales Seen Down Slightly

Jui Chakravorty writing for Reuters reported that U.S. auto sales are expected to have slipped slightly in September, reflecting the drag from the weak housing market and mushrooming consumer debt, analysts said on Monday.

Vehicle sales, widely watched as a leading indicator of U.S. consumer spending, began slowing in the second quarter and are expected to remain under pressure for the remainder of the year.

"We expect ... concerns related to declining home values, stock market volatility, and deterioration in the labor market continue to weigh on spending," Goldman Sachs analyst Robert Barry said in a note to clients.

When automakers report September sales on Tuesday, Ford Motor Co is expected to post the biggest drop in percentage terms. The second-largest U.S. automaker is seen having sales down as much as 18 percent.

Several analysts expect General Motors Corp's September sales to have fallen about 3 percent, but Lehman Brothers analyst Brian Johnson expects the automaker's sales to have risen 5 percent, driven by incentives on pickup trucks.

The two-day nationwide strike by GM's 73,000 factory workers last week is not expected to have hurt sales. The automaker clinched a tentative labor contract with the United Auto Workers union last Wednesday.

Analysts expect the strike to have cost GM about 25,000 vehicles in lost production, a small enough disruption to have been readily absorbed by available dealer stocks of cars and light trucks.

"(The) UAW strike doesn't appear to have hurt GM's sales," said Michelle Krebs, senior editor of AutoObserver.com.

The last major UAW strike against GM was an eight-week walkout at two Flint, Michigan plants in 1998 that shut down GM production. GM never recovered its pre-strike U.S. market share of 31 percent, losing more than 6 percentage points since.

"But this time around, the strike was over well before GM's inventory got low enough to frustrate shoppers," Krebs said.

Chrysler LLC's sales are expected to have fallen between 3 percent and 7 percent, according to analysts.

Toyota Motor Corp, on track to replace GM as the top global automaker this year, is expected to mark its third consecutive monthly sales drop, its first such decline since early 2003.

Toyota is expected to have seen a decline in passenger cars due to a model changeover at its youth-oriented Scion and supply constraint for several strong-selling models, including the Corolla sedan and the subcompact Yaris.

"Toyota's light truck sales should be down even more, as the steady performance of the new Tundra (fueled by high incentives) failed to offset large declines in the company's aging large SUV lineup," Lehman's Johnson said.

September had 25 selling days, one fewer than the same month a year earlier.

Adjusted on that basis, annualized sales are expected to come in between 15.8 million and 15.9 million units for September, down from 16.6 million units a year earlier, analysts said.

U.S. auto sales slipped by just under 1 percent in August, a smaller decline than some analysts had expected as discount programs at GM and other major automakers helped spur sales in the face of slack demand.

U.S. automakers have said they are keeping inventories leaner and cutting production sooner to avoid fire-sale showroom discounts, but the recent weakness in sales has heightened the focus on incentive programs.

All three U.S. automakers are expected to have used incentives to clear inventory in September, with Chrysler having been the most aggressive.

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