Ticonderoga Securities: Initial Read on August Auto Sales Points to Weakness
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Rating Summary:
17 Buy, 12 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Ticonderoga Securities: Initial Read on August Auto Sales Points to Weakness by Brian White
Our Initial Read on U.S. Auto Sales in August Points to Weakness. GM and Ford (NYSE F) are the first two auto makers to report auto sales for August. Both experienced month-over-month unit declines and missed forecasts by Edmunds.com. The remaining five auto companies are scheduled to report later today. Tyco Electronics (NYSE: TEL) (Sell-rated) has the highest auto exposure in our group at 34% of 3QFY10 sales, while Molex (Nasdaq: MOLX) (Neutral-rated) generated 15% of 4QFY10 sales.
GM's August U.S. Auto Sales Disappoint and Decline by 7% M/M. GM kicked off the August auto sales reports with U.S. auto sales declining by 7.3% month-over-month (down 24.9% Y/Y) to 185,176 units. This performance is well below the average M/M increase of 27.5% during August for GM. Recall, Edmunds.com had projected the August sales for GM to be down 5.8% to 188,100 units and factors in the three less selling days versus July for the auto industry. GM estimates that the overall U.S. auto industry delivered approximately 11.6 million of SAAR units in August.
Ford Sales Also Miss the Mark and Fall 8% M/M. Ford also released its August auto sales reports with U.S. auto sales declining by 7.6% month-over-month (down 14% Y/Y) to 157,503 units. Keep in mind, Ford sold its Volvo unit to Geely (175 HK, HK$2.56, NR) and generated unit sales in July of 4,300 units from this business. We estimate unit sales still declined by 5% when adjusting for Volvo. This performance is below the average M/M increase of 6.1% during August for Ford and missed the Edmunds.com estimate of down 3.2% M/M to 159,500. Ford maintained its 3Q10 production level at 570,000 vehicles but expects flat unit production levels in 4Q10.
Our Initial Read on U.S. Auto Sales in August Points to Weakness. GM and Ford (NYSE F) are the first two auto makers to report auto sales for August. Both experienced month-over-month unit declines and missed forecasts by Edmunds.com. The remaining five auto companies are scheduled to report later today. Tyco Electronics (NYSE: TEL) (Sell-rated) has the highest auto exposure in our group at 34% of 3QFY10 sales, while Molex (Nasdaq: MOLX) (Neutral-rated) generated 15% of 4QFY10 sales.
GM's August U.S. Auto Sales Disappoint and Decline by 7% M/M. GM kicked off the August auto sales reports with U.S. auto sales declining by 7.3% month-over-month (down 24.9% Y/Y) to 185,176 units. This performance is well below the average M/M increase of 27.5% during August for GM. Recall, Edmunds.com had projected the August sales for GM to be down 5.8% to 188,100 units and factors in the three less selling days versus July for the auto industry. GM estimates that the overall U.S. auto industry delivered approximately 11.6 million of SAAR units in August.
Ford Sales Also Miss the Mark and Fall 8% M/M. Ford also released its August auto sales reports with U.S. auto sales declining by 7.6% month-over-month (down 14% Y/Y) to 157,503 units. Keep in mind, Ford sold its Volvo unit to Geely (175 HK, HK$2.56, NR) and generated unit sales in July of 4,300 units from this business. We estimate unit sales still declined by 5% when adjusting for Volvo. This performance is below the average M/M increase of 6.1% during August for Ford and missed the Edmunds.com estimate of down 3.2% M/M to 159,500. Ford maintained its 3Q10 production level at 570,000 vehicles but expects flat unit production levels in 4Q10.
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