Most major U.S., foreign automakers see sales jump in October
Wednesday, November 3, 2010; 8:43 PM
Nearly all leading automakers boasted dramatically higher sales in October compared with a year ago as U.S. consumers opened their wallets to buy new cars.
The month was particularly strong for Detroit's Big Three, showing how far the companies have come since the crippling recession. Chrysler's sales jumped 37 percent and sales at General Motors rose 4 percent, about a year and a half after the automakers received a massive taxpayer bailout and were pushed into bankruptcy by the federal government. At Ford, which eschewed federal aid, sales were up 19 percent in October.
"It just shows the recovery's a very gradual process, but eventually cars do wear down and they have to be replaced," said David Whiston, an analyst at Morningstar. "You can only go to Pep Boys and AutoZone so many times to get those parts."
Foreign manufacturers also performed well, with sales at Nissan and Honda rising about 16 percent and Hyundai reporting a whopping increase of 38 percent.
The lone exception was Toyota, still smarting from a series of recalls that tarnished its sterling reputation. The Japanese conglomerate saw its sales slide just more than 5.3 percent. It was the only brand among the nation's top six automakers that had a drop in sales.
Overall, the auto industry is poised to sell 12 million vehicles this year, many more than analysts predicted a few months ago.
The promising figures from the Big Three are a sign of the turnaround in the works in Detroit. It also suggests that more of the $85 billion bailout may be returned to the government.
GM, maligned with the "Government Motors" label after its federal rescue, said Wednesday that it would raise $10.6 billion in an initial public offering that will enable the government to begin selling off its 61 percent ownership stake.
The shares will be priced between $26 and $29 each, according to a regulatory filing. The stock price would have to increase by about 60 percent for the government to recoup the $50 billion in aid that it injected into the company, analysts and federal officials say.
Separately, GM stated in a preliminary earnings filing that it will report a profit of around $2 billion in the third quarter. The automaker saw especially good sales from Buick, up 39 percent, and GMC, up 30 percent. But it warned that higher expenses related to the launch of new vehicles may affect its performance in the last three months of the year.
Chrysler's sport utility vehicles and other large vehicles propelled the company's higher numbers, with Jeep Grand Cherokee sales shooting up nearly 300 percent and Ram pickup sales increasing 40 percent.
"Jeep hasn't sold this many Grand Cherokees since December of 2006," said Edmunds.com analyst Ivan Drury. "If the Grand Cherokee is any indication of future Chrysler products, there is cause for optimism. This is exactly the sales trend Chrysler needs right now."
Ford, which did not file for bankruptcy like its domestic competitors, has shown it can sell small cars - long a struggle for U.S. manufacturers. In October, the company saw record monthly sales of its Fusion and Fiesta models.
"Ford continues to prove that turnarounds are built on strong product," said Edmunds.com senior analyst Michelle Krebs.