Storm Sandy knocks October auto sales below estimates

DETROIT (Reuters) - General Motors Co and Chrysler Group LLC both reported their strongest U.S. sales for the month of October since the financial crisis sent both U.S. automakers into bankruptcy, but the destruction of storm Sandy will cause the sector to miss overall sales expectations.

Ford Motor Co's sales last month edged up 0.4 percent, while Toyota Motor Corp's sales rose about 16 percent.

GM sales rose 4.7 percent to 195,764 vehicles, while those at Chrysler, an affiliate of Italy's Fiat SpA, increased 10 percent to 126,185 vehicles. Both totals were the best either automaker had seen since 2007, before the U.S. economy went into recession and caused a drastic decline in sales that led GM and Chrysler to file for bankruptcy in 2009.

Still, results of Ford, Chrysler and Toyota came in below expectations, while GM missed some analysts' estimates, suggesting that the U.S. industry will have a hard time reaching the 14.9 million-vehicle annual sales rate economists had predicted for the month before Sandy pummeled the U.S. East Coast. Auto sales are an early indicator each month of U.S. consumer demand.

The massive storm, which hit New York City on Monday evening, hurt U.S. demand at the end of the month, with Ford officials estimating the lost sales for the entire industry at 20,000 to 25,000 vehicles.

Ford officials said that would hurt the annual rate by 300,000 vehicles, although analysts have said the industry would likely make up any lost sales in November. GM officials agreed, saying Sandy hurt the annual rate by at least 300,000 vehicles.

GM said it sees an October annual sales rate in the range of 14.4 million vehicles. Ford estimates the rate in the high 14 million range including heavy and medium-duty trucks, in line with GM.

Volkswagen AG's U.S. operations chief, Jonathan Browning, said the industry would fall short of the 10 to 11 percent gain many had predicted.

"This is not yet a full-blown recovery," Browning told reporters on a conference call. "The overall environment is one of improving optimism, but it's still not a strong positive development in terms of the overall economy." He added that demand had been choppy in some regions even before Sandy.

Before the massive storm hit, analysts had predicted the industry would show an 11 percent sales gain, led by Toyota and Honda Motor Co, which benefited from increased demand for compact cars as gasoline prices remained high across the country.

Many automakers still made gains in the month as rising home prices, attractive vehicle financing options and Americans' growing need to replace their aging cars spurred more consumers to showrooms. That bodes well for the future, a top GM executive said.

"Year over year, the light vehicle selling rate has increased for eight consecutive quarters without a tailwind from the residential housing sector, but that is starting to change," Kurt McNeil, GM's vice president of U.S. sales operations, said in a statement. "If these trends continue, housing may be the final piece of the puzzle that lifts sales above 15 million units on an annual basis."

Over the last five years, the U.S. auto sector has undergone a wrenching overhaul that led to plant closures, job losses and the government-financed bankruptcy restructurings of GM and Chrysler. Ford also overhauled its U.S. operations, but did not take a government bailout.

The October sales report will be the last before Election Day, marking the end of a contentious U.S. presidential race that has repeatedly thrust GM and Chrysler into the spotlight in televised debates, stump speeches and campaign advertisements.

The sales report also caps a busy week for the U.S. auto industry, which saw third-quarter profit reports from all three Detroit automakers.

GM shares were down 0.6 percent at $25.34 on Thursday morning, while Ford shares were down 1.4 percent at $11.00. The broad S&P 500 Index was up 1 percent. (Additional reporting by Paul Lienert and Deepa Seetharaman in Detroit; editing by Gerald E. McCormick and Matthew Lewis)

Source: http://news.yahoo.com/storm-sandy-knocks-october-auto-sales-below-estimates-152924065--business.html

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