Sandeep Mukherjee and Abdulqadir Navsariwala also contributed to this note.

Fuel Efficient Vehicles supply Constraint Plays Spoilsport

Jun08 monthly auto sales turned out to be much worse with most of US automakers sales declining in double digit. In addition to negative macroeconomic environment of record high crude oil price, weakened housing industry, and lower consumer sentiment, supply constraint of compact fuel efficient cars at many automakers further precipitated the the sales decline. Secondary aftereffects of higher gas prices is resulting in lower resale value of pre-owned pick-ups and trucks causing restricted trade-ins for more fuel efficient vehicles. Moreover, number of selling days was three days lower in Jun08 than in Jun07, which also contributed to lower sales volume across the industry. read more…

Sandeep Mukherjee and Sneha Khatri also contributed to this note.

Japanese automakers march ahead as industry shifts gear

US automakers continued to struggle in a challenging environment for yet another consecutive month. The main cause of concern for the automakers was the rising crude oil prices. The industry is witnessing rather a sharp shift in sales from SUVs, trucks and luxury sedans towards fuel-efficient, compact cars and crossovers due to oil prices hitting as high as $120 per barrel. This trend is visible across all players. Consumer sentiment continues to be hurt by the tightened credit lending norms in addition to increased oil prices.

Among US automakers, GM posted sales decline of 16.3%, while F reported a sales decline of 12.2%. However, among the Japanese automakers, HMC posted sales increase of 6.9%, NSANY reported sales growth of 6.7% and TM reported sales increase of 3.4%. DAI reported sales decline of 3%. These increases were largely due to their significant presence in compact, subcompact and hybrid vehicles. Truck division for all the automakers reported decline in sales. The US industry recorded an estimated seasonal adjusted annual rate (SAAR) of 14.7 M units of cars and light trucks for the period ending Apr08.
read more…