Breaking down the ‘Brave New World’ for automakers
JEREMY HOBSON: Now let’s get to the automakers. For the first time in nearly seven years, all of Detroit’s car companies are making money. And we’re expected to hear today that those companies saw a 19 percent boost in sales last month.
Juli Niemann is an analyst at Smith Moore and Company. She’s with us live from St. Louis as she is every Tuesday. Good morning.
JULI NIEMANN: Good morning.
HOBSON: Well, I guess there’s going to be some effect from the Japan earthquake and tsunami and the supply shortages in the numbers that we’ll get today about auto sales, but let’s just talk about the overall fundamentals. What are we seeing?
NIEMANN: Well, it’s really solid at this point. Auto sales are likely, overall, to rise about 16 percent. May and June are always the strongest months for car sales. And this is a real good indicator for early consumer demand here. Why? Because old cars — we just don’t have many of them around. The whole fleet is old, but we don’t have many good used cars out there because of cash for clunkers. And consumers now want fuel efficiency, environmentally friendly cars. And they do have some more income. They’re a little more optimistic about their job stability here. But we’ve got some big problems ahead here because of the earthquake. It disrupted parts and supplies here in a shortage. Toyota’s going to see their sales really plunge just as they were recovering from recalls and they’re offering big sales incentives. Detroit is probably going to try and plug in all these gaps here. Which is a real positive for t hem. Ford’s reporting first quarter up 22 percent. Part of that was fuel efficient, small cars. Very good pricing and they had some good sales volume. Even Chrysler had the first net profit in the first two years here. They haven’t had that in a long time. Most of their sales happen to be SUVs. They don’t have a small car line up. GM’s going to report Thursday, but again it’s going to be the small areas. But after this, you’re going to see auto sales really fall off until fall because of Toyota.
HOBSON: Juli Niemann, analyst at Smith, Moore and Company. Thanks as always.
NIEMANN: You bet.
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