Ford, GM, Toyota: On the Road to Recovery
NEW YORK (
) -- Despite the terrible weather and
Toyota's
(TM) - Get Report
massive recall debacles, overall sales volume in the auto industry turned out impressively this February, as illustrated by the following highlights.
Ford
(F) - Get Report
, for one, watched its February sales increase 43% year-over-year to 142,285 vehicles, outpacing competitor
General Motors
for the first time in years.
S&P equity analyst Efraim Levy believes that Ford is benefiting from a combination of troubled peers and favorable and improving brand perception. Indeed, Ford continues to look increasingly better in the eyes of consumers as recalls by its peers keep arising. Among those competitors suffering recall issues is, of course, Toyota, which has recalled about 8.5 million vehicles over sudden and rapid acceleration problems; General Motors, which has recalled 1.3 million vehicles due to power steering issues; and
Chrysler
, which has recalled 300,000 vehicles due to problematic airbags.
For Ford, it's a gift that just keeps on giving. On Wednesday,
Nissan
(NSANY)
became the next automaker to issue a big recall of about 540,000 vehicles primarily in the U.S. market. The issue at hand is its brake pedal pins and fuel gauges.
Levy expects "solid market share gains for the month as both retail and fleet sales were strong" for Ford.
Ford stock has soared more than 596% in a 52-week period.
Of course, that's not to say that rival General Motors didn't also gain significant traction in February. The automaker, despite the billions of dollars it still owes taxpayers, reported an 11.5% increase year-over-year to 141,951 vehicles, while its four core brands -- Chevrolet, Cadillac, Buick and GMC -- watched sales improve 32.2%.
"In my mind, the biggest winner was General Motors," David Silver of Wall Street Strategies writes in a note to investors. "It announced a 1.3 million vehicle recall but that shouldn't spoil the party for a great month. General Motors (more so than Chrysler) has come back with a vengeance."
Still, like Levy, Silver continues to consider Ford to be his favorite automaker, all around, in the industry.
"Toyota is still a behemoth in the industry, but when you are on top, it gets harder and harder to surprise," Wall Street Strategies analyst Silver says. Indeed, Toyota American Depository Receipts (ADRs) have risen more than 26% over a 52-week period, making it ripe for a crash.
But perhaps to the surprise of many, Toyota actually didn't perform all that poorly in February, given the PR disaster it faced during the month over the handling of its vehicle recalls. Toyota sales declined 8.7% to 100,027 vehicles in February -- although, as Silver points out, it did still, after all, break the 100,000 vehicle mark.
Toyota is aggressively trying to win back customers, and the customer incentive program that the world's largest automaker's is rolling out for that purpose is ramping up faster than Wall Street Strategies anticipated. Silver writes that Toyota is offering free financing for five years on eight 2010 model-year vehicles, cash back of between $500 to $3,000 on nine models, and two years of free maintenance for returning customers, citing a document given to a dealer.
Still, it's arguable that none of the February sales numbers were as unexpected as
Chrysler's
. "By far, one of the biggest surprises in my mind was the month that Chrysler delivered," Silver said.
Chrysler
whose Dodge Ram pickup tracks are pictured above delivered roughly flat year-on-year results of 84,449 vehicles and a nearly 50% increase from the month before -- strong results for such a beleaguered automaker.
It was indeed, a strong month of sales for the auto industry as a whole. But it wasn't perfect. First of all, the reported numbers are being compared with weak results in the previous year. "The higher numbers compare with a weak year-ago February, when many businesses either cut back on purchases or were unable to get vehicles because some auto plants weren't running or financing was unavailable," Silver notes.
Secondly, much of the strong results are attributable to fleet sales to rental and commercial operators, which Silver says are generally less profitable than retail sales to individual customers.
Still, the numbers are likely comforting for auto-sector investors to see.
Nissan and
Volkswagen
also saw nice improvements in February sales, up 29.4% to 70,189 vehicles and up 32.6% to 18,116 vehicles, respectively.
Nissan ADRs are up more than 10% since August 2009, when the shares began registering on the site.
-- Reported by Andrea Tse in New York
RELATED STORIES:
>>Toyota Damaged by Recall Woes, Poll Says
>>Polls Are You Bullish or Bearish on Toyota Stock?
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