September's auto-sale pace best since '05

Volkswagen ekes out gain

A General Motors employee works on the assembly line at a GM plant in Arlington, Texas, in July. Adjusted for seasonal trends, automakers sold 18.2 million vehicles in September, according to a report from Autodata Corp.
A General Motors employee works on the assembly line at a GM plant in Arlington, Texas, in July. Adjusted for seasonal trends, automakers sold 18.2 million vehicles in September, according to a report from Autodata Corp.

Auto sales hit overdrive in September, fueled by cheap credit, good deals and relatively low gasoline prices. The annualized rate roared to the fastest pace in more than 10 years.

General Motors Co., Ford Motor Co. and Nissan Motor Co. all beat analysts' estimates, while Fiat Chrysler Automobiles NV, Toyota Motor Corp. and Honda Motor Co. met expectations for healthy sales gains last month.

Labor Day deals, continued low interest rates and gas prices drove up the selling rate, adjusted for seasonal trends, to 18.2 million vehicles, according to Autodata Corp.

"The U.S. is adding jobs, disposable income is rising, energy prices and interest rates remain low and business continues to invest, but the fact remains this has been a slow recovery," Mustafa Mohatarem, GM's chief economist, said in a statement. "The economy still has room to grow and so do auto sales."

Autos are selling well because "it's cheap to run 'em, it's cheap to buy 'em and there's more people with jobs, so more people need 'em," Mark Wakefield, managing director and head of the automotive practice for consultant AlixPartners, said in an interview. Already this year, "$98 billion has gone into people's pockets strictly because of gas prices going down. You're seeing the impact of that."

Volkswagen of America, dealing with a scandal over doctoring diesel engines to avoid pollution controls, even managed a sales gain of 0.6 percent, defying analysts predictions of a 6.7 percent decline for the brand. Combined with its Audi luxury line, Volkswagen AG sales rose 6.3 percent. VW has been forced to stop selling its vehicles equipped with the 2.0-liter TDI engine in which regulators say the company used a "defeat device" that allowed the engine to spew pollution at up to 40 times the legal limit.

GM sales rose 12 percent, exceeding estimates for a 9.3 percent gain, while Ford's light-vehicle deliveries jumped 23 percent, topping projections for a 19 percent increase. Nissan sales climbed 18 percent, compared with a 13 percent average estimate.

Fiat Chrysler extended its streak of sales gains to 66 months as U.S. deliveries rose 14 percent in September, powered by Jeep's 40 percent rise. The Italian-American automaker reported sales of 193,019 vehicles last month. Jeep sport utility vehicles, led by a record for Cherokee, had their second best month ever.

Car and light-truck sales totaled 1.44 million, a 16 percent jump that exceeded analysts' estimates for a 13 percent gain.

The last time the selling rate exceeded 18 million was July 2005, when it reached 20.6 million, according to Autodata, as Ford and DaimlerChrysler followed GM with offers of employee pricing for all customers.

"We're above the clouds. We don't know how high it will get exactly, but we're definitely above the clouds," Wakefield said. This will continue "next year and the year after and then we have a dip starting in 2018, but more meaningfully in 2019."

GM said sales rose to 251,310, led by its Silverado, Sierra and Colorado pickups. The Chevrolet Malibu sedan had its best September retail sales in a decade backed by a 38 percent gain. Malibu sales, including those to fleets, rose 12 percent to 17,066.

"The economy still has room to grow and so do auto sales, particularly now that the [millennials] are entering the workforce and starting households," Mohatarem said.

GM said Thursday that it plans to cut $5.5 billion in manufacturing, purchasing and administrative costs during the next three years, helping to finance a move into autonomous cars and car- and ride-sharing services.

The company told Wall Street analysts that the savings in logistics, manufacturing, information technology and other costs will more than offset increased investments in brand development and new technology.

GM says it will start testing a fleet of self-driving Chevrolet Volt plug-in hybrid cars late next year at its giant technical center campus north of Detroit. It also announced two car- and ride-sharing services that it expects to generate added profits. The test Volts will be summoned by employees with a smartphone app.

The company also has a car-sharing program that allows residents of a 479-home luxury apartment building in New York City to reserve SUVs and park them in any of 200 garages in Manhattan. It also plans to introduce a car-sharing service in an unidentified U.S. city early next year.

Chief Executive Officer Mary Barra said GM plans to disrupt the auto industry and introduce new forms of mobility.

Product development chief Mark Reuss said the autonomous car tests aren't being announced just to get media attention.

"We're not doing this as a publicity stunt," he said.

Sales of Ford's F-Series pickups rose 16 percent as the automaker finally began stocking dealers with full inventories after a nearly two-year changeover to the aluminum-bodied truck. Sport utility vehicles were Ford's top gainers, with the redesigned Edge up 33 percent and the Explorer soaring by 38 percent. Lincoln had its best month in eight years with a 20 percent gain driven by the MKC and MKX SUVs. Sales of cars rose less, with the Focus compact down 13 percent. For the first time since February 2005, all Lincoln models increased sales.

Nissan set a September sales record, driven by a 45 percent jump in sales of the Rogue small sport utility. Nissan's best selling car remained the Altima sedan, which saw a 12 percent increase. The Japanese automaker's Infiniti luxury line gained 30 percent, powered by a 76 percent rise in sales of its QX60 SUV.

Toyota sales rose 16 percent and Honda's gained 13 percent, both matching analysts' estimates. Toyota's traditional SUVs had a strong month, with the 4Runner rising 32 percent and the big Sequoia soaring 36 percent. Sales of Toyota's top seller, the Camry midsize car, rose 21 percent. Honda set a September sales record, led by light trucks, such as the Pilot SUV, which rose 31 percent. Honda's Acura brand rose 6.3 percent, led by the TLX sedan and RDX crossover.

Information for this article was contributed by Mark Clothier and Keith Naughton of Bloomberg News and by Tom Krisher and Dee-Ann Durbin of The Associated Press.

Business on 10/02/2015

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