Auto Sales Rebound From Extremely Depressed Levels; Ford Kills Volvo; Think's Electric Cars Roll Into New York

Auto sales are up, but not as much as meets the eye. For example GM sales are reported up 21% but adjusted for the number of sales days, the figure is 16%. Please consider GM 21% U.S. Sales Gain Trails Estimates as Lineup Cut

General Motors Co. posted a 21 percent increase in March U.S. sales that trailed analysts� estimates as a cutback in domestic brands damped the company�s gains in a strengthening auto market.

Deliveries rose to 188,546 from 156,380 a year earlier, GM said today. The Detroit-based automaker is finishing the disposal of half of its eight U.S. vehicle lines under a plan to return to profit after a government-backed bankruptcy.

The results showed GM�s challenge in trying to retain the top spot in the U.S. in a month when industry sales may have run at the fastest pace since 2009�s �cash for clunkers� rebates. Toyota Motor Corp.�s incentives to counter global recalls spurred rivals to match the offers.

The seasonally adjusted annual sales rate for cars and light trucks may have reached 12 million last month, the average of 8 analysts� estimates compiled by Bloomberg. That would be a fifth straight gain from a year earlier. March 2009�s pace was 9.86 million.

The estimates for individual automakers are adjusted for the number of selling days in a month. March had 26 sales days, 1 more than a year earlier. Because of the extra day, adjusted sales will be about 4 percent lower than the actual figures.

On that basis, GM�s increase was 16 percent, compared with an average estimate of 25 percent, based on 6 analysts.

Industry sales matching analysts� estimates would still underscore the market�s contraction in the recession. Annual U.S. deliveries averaged 16.8 million last decade through 2007. The 2008 total was 13.2 million, and 2009�s tally of 10.4 million was the fewest in 27 years, according to industry researcher Autodata Corp. of Woodcliff Lake, New Jersey.

2009 Totals were the worst in 27 years and that does not even factor in population growth. Thus, beating 2009 numbers is not much to crow about. 2008 was not a good year to say the least, and I doubt we get to that level.

After such depressed levels, we are seeing a return of some pent-up demand, but this is a cyclical bounce not a secular one.

Next year the comparisons will not be as easy to beat. Likewise they will not be as challenging as 2006-2007.

Ford Abandons Luxury Brands Outside US

Inquiring minds note Ford subtracts Volvo, makes Blue Oval main focus

Ford Motor Co's (F.N) sale of its Volvo unit this year will leave the No. 2 U.S. automaker with no luxury brand outside North America.

But does Ford even need one?

At least for now, analysts say no. They may bemoan a lost opportunity to integrate the money-losing Swedish brand Volvo into Ford, but they see an even sharper focus on the "Blue Oval" Ford brand as key to sustaining the company's turnaround.

Ford is farther along in an overhaul of its vehicle lineup than rivals General Motors Co GM.UL and Chrysler Group LLC, which went through government-supported bankruptcies in 2009. Ford posted a small profit last year and expects a profit for 2010.

The money-losing Volvo became a casualty of Ford's unswerving focus on its mass-market Ford brand and its balance sheet for the turnaround under Chief Executive Alan Mulally.

"We aren't really counting on doing anything other than focusing on the Blue Oval," Ford global marketing chief Jim Farley said in an interview at the Geneva Motor Show in early March.

Will City Drivers Accept Think's Electric Cars?

Inquiring minds might recall Think to manufacture electric cars in Indiana

The Think City is an all-electric car that can go about 60 miles per hour and has a driving range of about 100 miles. It runs from lithium ion batteries supplied by EnerDel, which is based in Indiana.

It's expected that Think will market the two-seat City to American consumers as a car suitable for daily errands or commuting. In many cases, it could be second car with a household's primary gas car able to take longer trips.

Think's Electric Cars Roll Into New York

Please consider Think's electric cars to roll into New York

Think will begin selling its all-electric City cars in the New York metropolitan area within the coming months, the company said Thursday.

Think's City model is a highway-legal electric vehicle that runs solely on a lithium ion battery system and gives off zero emissions. The car, which has a top speed of 60 mph, can be charged from either a standard U.S. 110-volt household outlet, or a fast-charging 220-volt station that can be installed for home use. The small two-door car, clearly intended for city driving and parking, has a battery system with a range of about 112 miles per charge.

Via the fast-charging 220-volt station, a Think City car can charge from zero to 80 percent capacity in about 15 minutes. However, using a standard household outlet can take up to eight hours.

Think, which has applied for U.S. Department of Energy loans, has gotten a lot of attention from both the U.S. media and government in large part because the Norway-based company offered to make the Think City a somewhat American-made car and help create green U.S. jobs in the process. And the New York government support that Think mentions is not such a coincidence given the fact that Ener1, a New York-based company, is the parent of Indiana-based EnerDel, the exclusive supplier of the lithium ion battery system for the Think City car in the U.S.

It will be a good thing if these cars are accepted. However, bear in mind what it will likely do to profits if they are.

I would not consider one of those cars. But for someone who only drives in a big city, or as a second car they are appropriate.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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