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Barclays on U.S. Autos & Auto Parts: Three Things We Learned from November Sales

December 2, 2011 1:18 PM EST
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Barclays on U.S. Autos & Auto Parts: Three things we learned from November sales

Barclays analyst, Brian A. Johnson, said, "U.S. sales of light vehicles improved markedly to a 13.6mn unit SAAR (seasonally adjusted annual rate), versus last month at 13.2mn SAAR (for Nov., consensus was 13.4mn and we had forecast 13.5mn). Within the result, we saw three key points:
retail is strengthening without a major incentive boost; Japanese deferred demand may be less than we had thought; and GM (NYSE: GM) remains on track to 80 days pickup inventory for December and an above-consensus 2012 pickup build."

1. The retail buyer is returning - without a major lift from deferred Japanese loyalists or incentives - and Ford (NYSE: F) and GM are showing fleet sales discipline. Importantly, retail sales appear to have improved to the 11.2-11.3mn SAAR range, up from a pace of 10.5mn in the prior two months.

2. Japanese brand loyalty and related pent-up demand may be limited to core car models - meaning less pent-up demand than we had thought (but fortunately the underlying consumer appears to be stronger). With relatively soft results at Honda (NYSE: HMC), and Toyota (NYSE: TM) running stronger in cars than in trucks, we now believe the return of deferred buyers may be somewhat limited. We now believe that only about 25% of the quake period 'lost' buyers will remain loyal (that is, did not go out and purchase competitor vehicles; before, we had estimated 50%.

3. GMT 900 pickup truck inventory still on track to year end goals: GM large pickup inventory days were flat (105 days versus 104 in October) while units in inventory fell by 5k.


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