April US sales take a breather. Not to worry. Well, not too much.

US auto sales are in today and the results are pretty interesting at first glance:  At the moment, we have sales +3%, not worrying as last April was a big month and Q1 was solid as we end the first 4 months up 10%.  

While I‘ll probably eat my over my low-end forecast for the year (13.5 million), April appears to be throwing some luke-warm water on those calling for 15 million this year and 16-17 soon after.  As I’ve said all along, replacement demand is not linear, and the spike in recent buying is slowly replenishing dealer used car stocks (if not the major auction lots.)

Clearly everyone picked up the slack in the immediate aftermath of the Japanese earthquake.  Even Hyundai had a tough time against last year’s April comps.

Chrysler (+20%) continues to push the pedal to the metal getting the most out of their industry high incentives and fleet sales.  Q1 profits bore out the immediate benefit with incremental margins around 10%.  It would be great if we see incentive and fleet start moving down.  While the short-term profit is there, and the Q1 margins bear it out with incremental OP around 10%, it is not healthy for long-term brand.

GM (-8%) was gunning last year for market share.  Now that we’ve lapped the year of hobbled competition, I am looking to see if they hold pricing, or go back to old bad ways of chasing that volume back down.

Ford (-5%) seems to be letting old Lincoln models age away as thy near replacement and giving back a little to the J3, nothing surprising here.  And by the way, I think Ford deserves kudos for a sold P&L and cash flow in Q1.

Toyota (+12%) is getting back in stride.  I would expect them to consistently pick it up over the next 3-4 months and be ready for the mid-sized shoot-out this fall with the new Camry.  I expect to see TCI or incentive spending only up slightly.

Nissan (0%) shows the comps weren’t as easy as Toyota with lackluster improvement.  Maybe we had a bit too much pull ahead for the end of their fiscal year in March.  Remember though, that while Nissan didn’t see as much disruption last year, Infiniti was hit hard with the Tochigi and Iwaki plants out of service.

Honda (-2%) on the other hand shows it is still trying to right the ship.  They’d better get it together before the fall Accord launch.  

Hyundai (1%) would appear to be taking a breather, but remember they benefited heavily last year, creating tough comps.  Bottom line is that regardless of the month, both Hyundai and Kia are solid players, up there on product and brand with Toyota, Nissan and Honda.

Watch out for Volkswagen (+27%) with another big month.  More local production, better diesel availability and excellent product will build the brand.  VW is doing well with the Passat and this should continue through the summer.  Audi continues to fly.  I would keep an eye on the volume side as the autumn mid-size and C-segment gets some new hot competition.

Bottom line:  Hold you horses, everyone.  US SAAR will top 14 million, but be careful modeling in a 15 million year.

·       Personally I encourage GM and Ford to try playing some pricing, I fear Chrysler will pay in a year or two on their pricing, and that’s when they will need it.  We’re all getting ready for a slew of new product and inventories look very good, so behave out there.

·       The J3 will steadily rebound, making it harder for the others to keep putting up headline growth and spiking their Q1 and Q2 earnings which will give shockingly easy comps. 

·       April is probably a good month to take a breather and assess what we you would expect from your company of choice in a 14.5 million market. 

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