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NADA Headlines (Nov. 2, 2010)

U.S. Auto Sales May Reach Fastest Pace in 14 Months for October

U.S. automobile sales in October may have run at the fastest pace in 14 months as buyers show they’re willing to pay more for 2011 model-year vehicles. Industrywide deliveries, to be released tomorrow, may have reached an annual rate of 11.9 million vehicles last month, the average of nine analysts’ estimates compiled by Bloomberg. That would top the 11.8 million pace of September, the fastest since the government’s “cash for clunkers” program in August 2009. The U.S. auto selling rate has stayed above 11 million since March, according to Autodata Corp., a research firm based in Woodcliff Lake, New Jersey. Ford Motor Co. may post a 14 percent sales increase, the average of six analysts’ estimates. Chrysler Group LLC, based in Auburn Hills, Michigan, may have led U.S. automakers for the third straight month with a 41 percent sales increase, the average of six analysts’ estimates, helped by higher deliveries to fleet customers. Deliveries by Detroit-based General Motors Co. will decline 6.3 percent, the average of three estimates. Recovering auto sales helped the four largest U.S. auto retailers to their best quarter for revenue in two years, according to data compiled by Bloomberg. AutoNation Inc., Penske Automotive Group Inc., Sonic Automotive Inc. and Group 1 Automotive Inc. combined to report sales of $9.26 billion, the most since the four had revenue of $9.38 billion in third quarter 2008. “New-vehicle traffic and selling rates in October are better than we expected,” Earl Hesterberg, CEO of Group 1, said in a telephone interview on Oct. 26. “There appears to be a very good chance that this will be the best seasonally adjusted selling month of the year.” Read more from Bloomberg.

Manufacturing Activity Surges in October

WASHINGTON -- Manufacturing activity expanded last month at the fastest pace since May, driven by demand in the United States and abroad for cars, computers and other goods. The report signals that U.S. factory output, which slowed over the summer, remains a strong player in an otherwise weak economy. The jump in October could ease concerns that companies are almost through rebuilding their stockpiles - a trend that appeared to be slowing factory output growth in recent months. "The U.S. manufacturing sector is getting a second tail wind," said (Eric Green, an economist at TD Securities). Americans are spending more on autos and computers. Demand for both products grew in October, according to the manufacturing report. Some auto makers are hiring after reporting healthy growth. Ford Motor Co. said last week that it made $1.7 billion in profit in the July-September quarter, a jump of 70 percent from a year earlier. The company has said it will add 500 new workers at a plant in Chicago that makes the Ford Explorer SUV, its first major hiring announcement in years. General Motors Co., meanwhile, has said it will add a new small car to its Cadillac line. It plans to spend $190 million to upgrade a factory in Michigan to build the car, and will add 600 jobs. Read more from The Associated Press.

G.M. Said to Plan Cut in U.S. Stake by a Third

General Motors will succeed in shrinking the federal government’s ownership stake to less than 50 percent in a $10.6 billion initial public offering later this month, people briefed on the matter said on Monday. G.M. is expected to sell about 365 million common shares at $26 to $29 each, these people said. It also plans to sell up to $3 billion worth of preferred shares that will later convert into common shares. The automaker is planning a three-for-one stock split that will bring its total outstanding shares to about 1.5 billion, one of these people said. At the high end of the offering’s proposed price range, G.M.’s market value could approach $60 billion, exceeding the $48.9 billion capitalization of the Ford Motor Company. Through the offering, the Treasury Department, which gained a 61 percent stake in G.M. as part of its $50 billion bailout of the company last year, will sell about $7 billion worth of shares. That will cut its holdings in the company to just more than 43 percent, these people said. Auto analysts have projected that G.M. could raise enough in its stock sale to eventually pay back much or all of its government-financed bailout, which included a quick bankruptcy filing that shed unwanted assets like dealerships and factories. But the plan will require both time and a rising stock price, both of which company and government officials acknowledge. Read more from The New York Times.

Virginia Dealer's Lead Narrows in Bid for Congress

WASHINGTON -- A Virginia dealer's bid for a congressional seat has lost ground and he is now in a dead heat in a recent poll, jeopardizing Republican hopes for a record six auto dealers in the House. Dealer Scott Rigell leads Democratic incumbent Glenn Nye by 41.5 to 41 percent, with a margin of error of 4.4 percentage points, according to a poll sponsored by Christopher Newport University, The Virginian-Pilot newspaper and Channel 13 News in Norfolk. Rigell, 50, is still favored to win tomorrow by the Cook Political Report, Rothenberg Political Report and RealClearPolitics Web sites. Besides Rigell, two other dealers bidding for House seats are favored to be swept in on a national Republican wave: Mike Kelly in Pennsylvania, a former Notre Dame football player, and James Renacci in Ohio. Cleveland area dealer Tom Ganley, a National Automobile Dealers Association board member, is expected to lose his bid to unseat Democratic Rep. Betty Sutton, author of the cash-for-clunkers bill. Read more from Automotive News

Nissan Plans Three More Electric Vehicles for U.S.

Nissan Motor Co. plans to launch three all-electric vehicles in the United States in the next four years, in addition to the battery-powered Leaf: an electric Infiniti car, a small commercial van and a small urban car. Nissan will begin delivering Leaf cars next month to U.S. customers — 90 percent of whom are new to the Nissan brand, said Carlos Tavares, executive vice president at Nissan, and the company's top manager for North and Latin America. While the first wave of Leaf owners will not be struggling with "range anxiety," the fear of being stranded with a dead battery, some analysts say anxiety and cost concerns will limit demand for all-electric cars in the United States. Driving distances can be longer in America than in other regions, and fuel taxes are lower. Last week, J.D. Power and Associates estimated that U.S. electric vehicle sales will hit 100,000 a year by 2020, compared with 332,000 in China and 742,000 in Europe. J.D. Power expects U.S. sales of plug-in and extended-range electric cars, such as the Chevrolet Volt, to reach 162,000 vehicles a year by 2020. "You won't be surprised that we disagree and are more bullish," Tavares told the Automotive Press Association. Read more from The Detroit News.

Opinion: For EVs, Key Number is Price, Not Range

Companies that want to sell electric vehicles and plug-in hybrids spend a lot of time talking about range: 50 miles, 75 miles, 100 miles on a charge. Most likely, they're focusing on the wrong number. As important as driving range may be, the key number in consumers' minds will be the one in the lower right corner of the price sticker. The price premiums for various forms of electrified drive are likely to turn off car shoppers, according to a new study by J.D. Power and Associates. Survey results show that the main reason consumers consider a hybrid is lower fuel costs, (Mike Omotoso, Power's senior manager of powertrain forecasting) said. On the flip side, the main reason to reject a hybrid is the cost premium. As Omotoso phrased it: "People definitely think with their wallet." Read more from Automotive News

Ford Bets Big in Digital Marketing Departure

Forget the Super Bowl: Ford's marketing chief Jim Farley says he can get more for less on Facebook, Twitter and YouTube. If Farley is right, millions of hits for Ford Motor Company on social media websites will dwarf the impact of ads broadcast during the National Football League's February championship game -- high-profile space selling for $3 million for 30 seconds. "Customers are spending as much time with the mobile smart phone or online as they are watching TV now, so our advertising dollars have to flow to where the people are," Farley told Reuters in an interview. He is betting Ford can use Facebook and Twitter to accelerate the word-of-mouth recommendations long familiar to the auto industry and help the blue-oval brand connect with younger and richer people. Farley said he learned at Scion that the only way to push past consumer skepticism is "to break into their world." "You have to shove your way in there. The way we do that is to break down myths. The great thing about Americans is they are always hungry for something new," he said. Read more from Reuters.