U.S. auto sales defy economic fears

[rickaren]

September 24, 2011 Autos Insider | U.S. auto sales defy economic fears | The Detroit News

U.S. auto sales defy economic fears

Ford analyst foresees September to be best month since April



Wall Street might be acting like a double-dip recession is looming, but U.S. auto sales are continuing their slow recovery, a Ford Motor Co. analyst said Friday.

Auto sales in September are running above August seasonally adjusted levels — including stronger full-size pickup sales. September is on pace to be the highest sales month since April, said George Pipas, Ford's U.S. sales analyst.

Inventories from Japanese automakers hurt by the earthquake will be fully restored in October. "It will be a no-excuses industry as we get into the fourth quarter," Pipas said.

The analyst does not expect auto sales to decline much, if at all, for the rest of the year. But even holding their own at the current pace would not be enough to exceed 13 million for the full year. Industry auto sales will be released Oct. 3.

The wild card is always incentives. But predictions that increased inventories would lead to bigger discounts have not materialized. "There is no evidence of incentive escalation," he said, noting they are spot on with August levels.

And then there is Wall Street and the wild ride the economy has sent it on.

Wall Street has not lost as much as it did in late July and into August, Pipas noted.

"There is more uncertainty today than at the beginning of the year about the pace of the economic recovery."

While Ford will continue to monitor economic indicators, its plans are not based on the likelihood of a recession.

"You can't ignore the economic data coming in," he said, but Ford is planning on slow economic growth over the next several quarters.

Even if a double dip were to occur, "we're more prepared," Pipas said, having restructured over the past five years. "Now the business is right-sized for this level of auto sales."

Auto sales have been holding at a 12 million pace, which Pipas attributes in large part to the replacement demand — scrappage rates of about 6 percent on 250 million vehicles on the road in the U.S. would generate the need for 12.5 million to 13 million new vehicles.