Automakers Peel Out With a Strong January

By David Silver

Remember all those year-end sales events that drove sales, and were supposed to be lessened moving into 2011? Well that didn't really happen as incentives continued to be high as automakers needed to induce consumers into showrooms, especially considering that the month of January seemed to be just one snowstorm after another. I remember when at the beginning of the winter, the first time it snowed, I said how much I loved the snow. Yeah, well, that isn't exactly the case anymore. Sorry, back to auto sales.

Looking at the numbers General Motors (GM) came in above expectations, but the biggest surprise of the month was Chrysler. Sales were up 22.7% year over year on a 47% increase for the Jeep brand and a 22% increase in the Dodge brand. Jeep Grand Cherokee, which was recently revamped, saw sales increase more than 130% year over year. A good sign is also the 138% increase in the Dodge Viper (for the U.S. economy as a whole), however, the Company still lacks a small car lineup that will make it a successful IPO. Chrysler brand sales were 7% lower year over year, and that includes a 45% increase in the Town & Country.

While January marked an improvement for car makers, it ranked as a poor showing by historical standards. Except for January 2009, last month was the weakest January since 1993. The industry is estimated to have sold approximately 800,000 vehicles, which is dramatically below that of December, traditionally a much stronger month, so the month-over-month decrease isn't a cause for concern.

Not surprisingly trucks, SUVs, and crossovers were among the best performing segments of the industry despite the continued volatility of fuel prices. Probably the best news for the automakers, however, is the strength of retail sales versus fleet sales. Sales to rental companies and police stations etc. are considered fleet sales and are much lower margin sales than sales through dealerships.

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So where does the industry go from here? The weather had to be a drawback for sales, but then again, maybe that's a reason why sales of SUV's and trucks were so strong. Drivers of those small fuel efficient vehicles were tired of slipping and sliding in the snow and ice wonderland that used to be known as the Northeast. Chrysler and Hyundai (HYMLF.PK) are going to continue to turn heads over the next few months, however, for the sake of the American taxpayer, I hope that Sergio Marchionne (CEO of Chrysler) keeps his mind concentrated on the small things, and takes his time getting the IPO to the market.

General Motors and Ford increased production of trucks, while Chrysler put out a higher production forecast a few months ago. Additionally, General Motors is increasing its production values for the Chevy Volt. There was all this hype about how successful the Volt was but we haven't heard anything since the production increase was announced. I personally do not think that the Volt will be the savior that some expect it to be. I am trying to get into a dealership to drive one; I will keep you posted.