Barclays on U.S. Autos & Auto Parts: May Sales Soft but not Sunken
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28 Buy, 13 Hold, 3 Sell
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Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Barclays on U.S. Autos & Auto Parts: May Sales Soft but not Sunken
Barclays analyst said, "US sales of light vehicles decreased materially in May to an 11.8mn SAAR, down from 13.2mn in April, and somewhat below our 12.1mn expectation. While the headline number looked soft, we concur with GM (NYSE: GM) that only a small portion of the decline (around 0.4mn units of SAAR) was due to weaker consumer sentiment, which means that May SAAR would have been around 12.8mn units without the Japan production disruptions. The main driver of the weak SAAR was potential car buyers deferring their purchase due to the lack of availability of certain models, and the higher prices set by Japanese manufacturers to preserve inventories."
"The rebound in SAAR may occur earlier than some anticipate as inventories for most models have begun to improve and Japanese OEMs are already raising incentive spending..." Companies of note: Toyota (NYSE: TM)
"High gas prices keep pressuring light truck sales, but May saw some sequential improvement. Smaller and more fuel-efficient vehicles continued to perform particularly well, but there was no evidence of additional deterioration in the mix of larger trucks. In fact, full-size pickups represented 9.9% of May industry sales, up from just 9.6% in April; total light trucks represented 48.5% of sales, up 100bps from March and April. In our view, the main worry on the truck front is the size of GMT900 pickup inventories (120 days of supply), which could require GM to cut down production in the summer (which would be negative for GM and American Axle (NYSE: AXL))."
"Ford's 3Q production guidance is actually in line with investor expectations.
Investors appeared to be concerned about Ford's 3Q North American production guidance of 630k units, which is in line with our 625k estimate, but appeared softer than CSM's 665k units. We believe the difference is a timing issue, with CSM assuming a 2Q hit from Japan related supply disruptions to be made up in 3Q; this hit never materialized as witnessed by Ford reiterating yesterday its above-CSM 2Q production guidance. On a six-month basis, Ford's production guidance of 1,340k units is actually in line with CSM's 1,336k estimate and slightly above our 1,300k unit forecast."
Barclays analyst said, "US sales of light vehicles decreased materially in May to an 11.8mn SAAR, down from 13.2mn in April, and somewhat below our 12.1mn expectation. While the headline number looked soft, we concur with GM (NYSE: GM) that only a small portion of the decline (around 0.4mn units of SAAR) was due to weaker consumer sentiment, which means that May SAAR would have been around 12.8mn units without the Japan production disruptions. The main driver of the weak SAAR was potential car buyers deferring their purchase due to the lack of availability of certain models, and the higher prices set by Japanese manufacturers to preserve inventories."
"The rebound in SAAR may occur earlier than some anticipate as inventories for most models have begun to improve and Japanese OEMs are already raising incentive spending..." Companies of note: Toyota (NYSE: TM)
"High gas prices keep pressuring light truck sales, but May saw some sequential improvement. Smaller and more fuel-efficient vehicles continued to perform particularly well, but there was no evidence of additional deterioration in the mix of larger trucks. In fact, full-size pickups represented 9.9% of May industry sales, up from just 9.6% in April; total light trucks represented 48.5% of sales, up 100bps from March and April. In our view, the main worry on the truck front is the size of GMT900 pickup inventories (120 days of supply), which could require GM to cut down production in the summer (which would be negative for GM and American Axle (NYSE: AXL))."
"Ford's 3Q production guidance is actually in line with investor expectations.
Investors appeared to be concerned about Ford's 3Q North American production guidance of 630k units, which is in line with our 625k estimate, but appeared softer than CSM's 665k units. We believe the difference is a timing issue, with CSM assuming a 2Q hit from Japan related supply disruptions to be made up in 3Q; this hit never materialized as witnessed by Ford reiterating yesterday its above-CSM 2Q production guidance. On a six-month basis, Ford's production guidance of 1,340k units is actually in line with CSM's 1,336k estimate and slightly above our 1,300k unit forecast."
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