U.S. Feb Sales Shuffle: Ford leads GM, Toyota Third

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U.S. light vehicle sales in February were better than analysts had predicted, and a definite improvement compared with a year ago, but the industry remains adrift with no end to the Great Recession in sight.

With total sales of 780,000 vehicles, up 13% from a year ago, the seasonally adjusted annual  selling  rate came in at just over 10 million units, far, far below the halcyon days of 15-17 million units that the industry grew fat on just a few years ago.

The snowstorms in my view affected the major makers equally. And in the face of this chilling weather Ford, General Motors, Nissan, Honda, Hyundai and BMW — achieved double-digit percentage growth when compared with a dreadful February 2009.

The big news was that Ford Motor Company – helped by resurgence in passenger car and fleet sales – just edged out GM by fewer than 500 units to move into the Number One spot for the first month since August of 1998, when GM was closed by a bitter UAW strike. GM, in its thus far unsuccessful quest for profitability, had trimmed incentives, especially on its pickup trucks.

The real titleholder is debatable. When the final numbers were tallied last night, it emerged that rounding to 142,000 vehicle sales for each means a dead tie. And one month does not a sales race make. Moreover, I am reminded of the advice of the all too rare one-handed economist – use quarterly data to make trends clearer and eliminate monthly noise. Surely, this applies here.

Still, this is a momentum business.  GM with yet another North American reorganization, split sales and marketing management responsibility, in the process eliminating the once powerful, Baron-like divisional manager positions. It is a recognition by post-bankruptcy management that GM remains severely wounded and has a steep climb in front of it. Mark Reuss, GM North America president, put it succinctly yesterday. “GM was not moving forward fast enough or with enough success.” He also promised that his starting lineup is now finally in place for the duration. (Click Here)

While a cursory analysis led writers of some of the early stories to portray a 9% decline at Toyota Motor Sales as an unmitigated disaster, they ignored several mitigating  aspects. Not least, of course, was the “stop sale” of its most popular products because of accelerator pedal recalls at the beginning of the month. This will not apply to March sales numbers when they come in. In fact, it is amazing to me Toyota in the face of unrelenting media criticism, and with its dealerships overwhelmed with recalled cars, that Toyota sold as many vehicles as it did. (Click Here) Nonetheless, Toyota’s year-to-date numbers –  with a -22% total swing to the negative in sales, and a drop of almost three percentage points in share – are awful.

In response, Toyota also put in place record levels of incentives late yesterday, which will continue through April 5. These include no interest rate financing, as well as low lease rates.  (Click Here) If Toyota with its large and still largely loyal owner body starts to turn things around, other automakers will be forced to counter, despite early assurances from executives that they would not.

One potent weapon deployed by Toyota, which makes competitive bean counters blanch, is two-years of free maintenance for returning  buyers. We await replies from the marketing executives at Ford, GM and Chrysler about this. No one is going to follow willingly this one.

However, the fact that Toyota did not extend its warranty, as was widely – and erroneously- speculated in mainstream auto media, says something. The question is what: Are longer warranties not an effective marketing tool, or, more worrisome for Toyota and its future buyers – the quality emperor might truly have no clothes?

Companies to watch after the new Big Three of Ford, GM and Toyota, include Number Four Chrysler, which at 84,000 units is just treading water, and with dim short-term prospects due to the lack of fresh product.

Looking much, much stronger are Number Five Honda and Nissan at Six, which is now only 10,000 units behind it. Both could easily surpass Chrysler later this year if their trends hold. Honda’s Accord outsold the Camry as it became the second best selling vehicle behind the Ford F150 pickup.

Other runners, much farther back in the pack, to keep an eye on include Hyundai, Volkswagen and Subaru, all of whom are posting strong sales gains on admittedly small bases.

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