November 1, 2012 / 3:34 PM / 8 years ago

Storm Sandy knocks October auto sales below estimates

DETROIT (Reuters) - Superstorm Sandy’s fury caused U.S. auto sales to fall short of expectations in October, but industry executives still see a strong fourth quarter as the housing market improves.

Fiat 500's are shown at the Criswell Chrysler-Dodge-Jeep-Fiat-Ram truck dealership in Gaithersburg, Maryland October 2, 2012. REUTERS/Gary Cameron

While General Motors Co (GM.N) and Chrysler Group LLC both reported their strongest sales for October since the 2007-09 financial crisis, the massive storm that hit the U.S. East Coast took as much as 30,000 vehicle sales out of the mix.

“Clearly, the storm had a bigger than anticipated impact on sales,” said analyst Jesse Toprak. “It’s not the blockbuster month perhaps that we anticipated, but I would still say it’s a healthy rate.”

Ford Motor Co’s (F.N) U.S. sales last month edged up 0.4 percent, while sales for Toyota Motor Corp (7203.T) and Honda Motor Co (7267.T) rose about 16 percent and 9 percent, respectively. Nissan Motor Co Ltd’s (7201.T) sales fell 3.2 percent.

GM sales rose 4.7 percent, while those at Chrysler, an affiliate of Italy’s Fiat SpA FIA.MI, increased 10 percent.

Still, results from all the major automakers came in below expectations, indicating the U.S. industry will fail to reach the 14.9 million-vehicle annual sales rate economists had predicted for the month before Sandy pummeled the East Coast. Auto sales are an early indicator each month of U.S. consumer demand.

Auto executives and analysts said the industry will recoup much of the Sandy-related lost sales in November and December, especially after election day on Tuesday. Some automakers, including GM, Nissan and Toyota, are even offering deals to customers in regions hit by the storm.

Over the last five years, the U.S. auto sector has undergone a wrenching overhaul that led to plant closures, job losses and the government-financed bankruptcy restructurings of GM and Chrysler in 2009. Ford also overhauled its U.S. operations, but did not take a government bailout.


The October sales report will be the last before election day, marking the end of a contentious U.S. presidential race that has repeatedly thrust GM and Chrysler into the spotlight in televised debates, stump speeches and campaign advertisements.

“As far as the election is concerned, they’ve made the economy a centerpoint of their mudslinging,” Kurt McNeil, GM’s vice president of U.S. sales operations, said on a conference call. “That just has caused some uncertainty in the consumers’ minds. Once we get past the election, all of these strong economic fundamentals are going to continue to play out.”

Citing an improving housing market that should help the industry record a strong fourth quarter, GM sees industry sales for this year at close to 14.5 million vehicles. Ford expects about 14.4 million. That would be the highest annual total since 16.1 million vehicles in 2007.

The massive storm, which hit New York City on Monday evening, hurt U.S. demand at the end of the month, with Ford officials estimating the lost sales for the entire industry at 20,000 to 25,000 vehicles. Toyota estimated the loss at 30,000 vehicles.

Ford officials said their estimate translates to a hit to October’s annual sales rate of 300,000 vehicles. GM officials agreed, saying Sandy hurt the annual rate by at least 300,000 vehicles.

GM said it now sees an October annual sales rate in the range of 14 million to 14.2 million vehicles. Ford estimates the rate in the high 14 million range including heavy and medium-duty trucks, which typically total 300,000 vehicles. Morgan Stanley said the total is heading toward 14.1 million.

Toyota executives said that before Sandy hit, the industry had been heading for an annual selling rate in October of 14.7 million vehicles, but that the rate was now going to end at 14.3 million.

TrueCar’s Toprak said dealers often exceed 40 percent of total sales for any month in the last seven days. GM said its dealers from the Washington area through New England, including parts of Pennsylvania, had damaged cars and some were literally under water. In fact, half of GM’s dealers in New Jersey were still without power.

Volkswagen AG’s (VOWG_p.DE) U.S. operations chief, Jonathan Browning, said the industry would fall short of the 10 to 11 percent gain many had predicted.

“This is not yet a full-blown recovery,” Browning told reporters on a conference call. “The overall environment is one of improving optimism, but it’s still not a strong positive development in terms of the overall economy.”

He added that demand had been choppy in some regions even before Sandy. The German automaker’s combined U.S. sales for its VW, Audi and super luxury brands rose 20 percent in October.

Many automakers still made gains in the month as rising home prices, attractive vehicle financing options and Americans’ growing need to replace their aging cars spurred more consumers to showrooms. That bodes well for the future, as GM’s McNeil said an improving housing market could be the “final piece of the puzzle” that lifts industry sales above 15 million annually.

The sales report also caps a busy week for the U.S. auto industry, which saw third-quarter profit reports from all three Detroit automakers.

GM shares were unchanged at $25.50 on Thursday afternoon, while Ford shares were up 6 cents at $11.22.

Additional reporting by Paul Lienert and Deepa Seetharaman in Detroit; editing by Gerald E. McCormick and Matthew Lewis

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