Chrysler (NYSE: GM) sales rise 30 percent on Jeep, Ram demand

Orlando, FL 6/1/12 (StreetBeat) -- Chrysler's U.S. sales jumped 30 percent last month, a sign that Americans remain determined to replace their aging cars and trucks despite the falling stock market and shakyconsumer confidence.

The company said it sold more than 150,000 cars and trucks in May, compared with 115,000 in the same month a year ago. Chrysler brand sales rose 80 percent, while Jeep sales were up 24 percent.

Chrysler was the first automaker to report sales on Friday. Total U.S. sales for May should rise 30 percent to 1.4 million cars and trucks, according to forecasts from industry analysts. They expect sales for 2012 to reach 14.5 million, up from 12.8 million last year.

Analysts say the May figures likely will show that pent-up demand is overpowering any fears about the economy. Although the stock market had its worst month in two years and consumer confidence was wobbly, car and truck sales are expected to stay resilient. People are buying because they have to replace aging cars and trucks that they kept through the Great Recession. The average age of a vehicle on U.S. roads is now pushing 11 years, and they are simply wearing out.

"You have so many old vehicles on the road," said Tom Libby, lead analyst for the Polk automotive research firm who sees growing auto sales through the next two or three years.

People may also feel more flush because gasoline prices have tumbled to an average of $3.61 a gallon. That's 33 cents below the peak of $3.94 on April 6. Some experts say gas could fall as low as $3.40 between now and Labor Day.

A big auto sales increase in May won't be a surprise, because May of 2011 was a poor month. Last year's March earthquake in Japan slowed production at Honda and Toyota (NYSE: TM) factories and dealers ran short of cars by May.

Japanese carmakers will see the biggest sales increases. Toyota Motor Co.'s sales are expected to nearly double thanks to demand for the new Camry and the new Prius V wagon and Prius C subcompact. Analysts say Toyota is rapidly regaining market share it lost to Hyundai, General Motors (NYSE: GM) and Ford (NYSE: F) in the months following the earthquake.

Honda also is expected to post a strong sales increase. The new CR-V is a big seller for Honda.

The TrueCar.com auto pricing website estimates GM's sales will rise 17 percent for the month, while Ford's will increase 11 percent.

The strong car sales are a good sign for the economy, which has given off mixed signals of late. A survey released this week by the Conference Board suggested consumer confidence fell sharply in May, although a separate survey by Thompson Reuters and the University of Michigan showed consumer sentiment at its highest level in four-and-a-half years, partly because gasoline prices have dropped.

Consumer confidence is closely watched by car companies, since consumers need to have faith in the economy before they're willing to spend on big-ticket items.

May's sales pace was so strong that forecasting firm LMC Automotive raised its 2012 forecast to 14.5 million, up from 14.3 million. That compares with sales of 12.8 million in 2011.

But Jeff Schuster, LMC's senior vice president of forecasting, cautioned that it could take a few weeks to determine if bad economic news will scare off car buyers.

"It's a little bit of a wait-and-see if there will be a further impact to auto sales, but right it doesn't seem to be throwing anything off," Schuster said.

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Toyota (NYSE: TM) says China sales in April up 68 percent

Palm Beach, FL 5/7/12 (StreetBeat) -- China sales by Japan's Toyota Motor Corp (NYSE: TM) and its two local joint-venture partners rose 68 percent in April from a year earlier to about 81,700 vehicles, according to a company spokesman.

For the first four months of the year, the Japanese auto maker sold a total of about 293,200 vehicles, a 14.3 percent increase from the same period last year, said the spokesman, Takanori Yokoi.

Yokoi said the large year-on-year jump in April sales was due chiefly to the fact that sales during April last year were comparatively low because of the massive earthquake on March 11. The earthquake and tsunami paralyzed production of key components and affected Toyota's vehicle production around the world, including China.

Still, Toyota's sales momentum was "fairly strong" so far this year, said Yokoi. Because the company's sales performance was so bad last year due to the impact from the earthquake Toyota "should be able to post double-digit sales growth at least for the next several months," the Beijing-based spokesman said.

"If things go as normally as we expect, we should be able to meet our sales goal" of selling one million cars this year, said Yokoi.

Toyota's China sales last year totaled about 883,400 vehicles, a 4.4 percent increase from 2010, reflecting in part the general slowdown of automobile sales in China last year.

After rapid growth in 2009 and 2010, China's auto market as a whole slowed considerably last year as sales of smaller-engine cars and commercial vehicles stalled after the government ended some incentives for car buyers.

Various industry forecasts point to overall vehicle sales this year growing about 5-10 percent from 2011.

Toyota would have to grow sales by about 13 percent this year to meet its goal of selling one million vehicles.

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Toyota cuts profit outlook, Thai floods take toll

Tallahassee, FL 12/8/11 (StreetBeat) -- Toyota Motor Corp. (NYSE:TM) on Friday sharply downgraded its earnings forecast for this fiscal year through March, blaming a strong yen and the massive flooding in Thailand.

Japan's biggest automaker expects to book a net profit of 180 billion yen ($2.3 billion), down 54 percent from the 390 billion yen it projected in August. It estimates leaner revenue of 18.2 trillion yen ($234.36 billion) from 19 trillion yen. Toyota expects to sell 7.38 million vehicles worldwide this year instead of 7.6 million it predicted four months ago.

The maker of the Camry and Corolla sedans is on track to lose its title as the world's largest automaker this calendar year. Toyota sank to No. 3 in vehicle sales during the first six months, trailing U.S. rival General Motors Co. (NYSE:GM) and Volkswagen AG (OTCBB:VLKAY.PK) of Germany. Toyota held off from releasing new earnings forecasts when it announced its first-half earnings results last month, citing uncertainties from the Thai floods that disrupted parts supplies.

It's been a rough year for Japanese car makers, who were first hit with the earthquake and tsunami in March. They had largely rebounded from the disaster when they confronted the immense flooding in Thailand this autumn. Car production as far away as North America was scaled back as the creeping floodwaters put suppliers out of action. The flooding, which was Thailand's worst in half a century, will result in an output loss of 230,000 vehicles, said Executive Vice President Satoshi Ozawa at a news conference in Tokyo.

But among Japan's car makers, Honda Motor Co. has been the worst hit by the floods. It has yet to release forecasts as a result.

Compounding the pain is a strong yen, which hit multiple historic highs against the dollar this year. With jitters about European and U.S. economies, global investors have turned to the yen as a relative safe haven.

Japanese manufacturers, including car and high-tech makers, responded by shifting more production abroad — a trend that has government officials and the business community concerned about a hollowing out of Japanese industry. "Because of the strong yen, the collapse of the foundation of Japanese manufacturing has begun," Ozawa said.

Toyota's new forecasts incorporate a 120 billion yen hit on operating profit from the Thai floods and another 190 billion yen from the negative impact of currency levels. It now sees operating profit of 200 billion yen, compared with 450 billion yen in its August forecast.

The company lowered its foreign exchange assumptions to account for the yen's appreciation over the last several months. It expects the yen to average 78 to the dollar this year, from 80 yen to the dollar in its previous estimate. It assumes 109 yen against the euro, down from 116 yen to the euro.

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Possible Shutdown for Toyota

Toyota's U.S. manufacturing arm is preparing for a possible shutdown because of parts shortages from Japan, a Toyota spokesman said. Word has gone out to all 13 of Toyota's factories in the United States, Canada and Mexico. This does not mean that the plants will stop working, Toyota spokesman Mike Goss said, but that they should be ready in case the need arises.

"We expect some kind of interruptions," he said.

While Toyota's car factories in Japan have stopped working since the March 11 earthquake in Japan, the automaker was able to resume production of some auto parts on March 17.

Toyota employs 25,000 manufacturing and R&D workers in North America.

Toyota has a long-standing policy of continuing to pay its employees while finding other work for them -- either within Toyota or even in the communities where they are located doing volunteer work -- during production shut-downs.

But Toyota's plans signal that this parts issue could be just the beginning of an industry-wide problem.

"They did resume parts production for overseas and for replacement parts," Goss said, "but that was just the suppliers that were capable of doing it."

Toyota is still in the process of assessing which suppliers are capable of full operation at this time, Goss said.

"We're not talking about just a few companies," he said.

Even suppliers based in North America may not be able to provide components for cars because they, in turn, rely on parts suppliers in Japan with crippled factories.

"All automakers are just now figuring out who supplies every little part." Said Edmunds.com senior analyst Michelle Krebs. "The shortage of any one could shut down an assembly line. Toyota isn't the only one vulnerable; virtually all major automakers have some risks."

Spokespeople for Nissan, Honda and Ford all said those automakers are making no plans to shut down their plants at this time.

U.S. automaker General Motors has already had to stop production of a truck plant in Shreveport, La. and a related engine plant in New York State due to shortages of parts from Japan.

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