Auto Sales Rise Along With S&P 500

DETROIT -- ( TheStreet) -- The auto industry had its best September since 2007, a month when the stock market approached its all-time high.

In September 2007, the S&P 500 reached 1527; the following month it hit 1576, before starting a descent that took it to 667 in March 2009.

New-car sales in September totaled about 1.2 million, and the seasonally adjusted annual sales rate was 14.9 million, the highest since 2008. "This number certainly puts the wind in the sails of auto recovery," said analyst Jessica Caldwell on a conference call with auto reporters. Auto sales have climbed 60% since 2009, she noted.

"The product replacement cycle is in full swing," said Michael Yoshikami, CEO and founder of Destination Wealth Management in Walnut Creek, Calif., in an interview. "Consumers have been waiting to upgrade cars, and now have incentives and historically low interest rates.

"The S&P 500 is a (measure) of investor sentiment, and being close to 2007 highs is an indication that investors are not only feeling better, as (Federal Reserve Chairman Ben) Bernanke has wanted, but also that they are operationalizing that and spending money on durable goods," Yoshikami said.

"I am bullish on the auto cycle," he said. "I think this is going to continue, I think we have two years of pent-up demand for new vehicles, and you are going to see cars continue to sell." Meanwhile, the S&P 500 could gain another 5%, he added.

Of course, investors in 2007 didn't have to worry about tailspin economies in Europe and in the European auto sector. The news from the recent Paris Auto Show was grim. In the area of good news, Peugeot-Citroen CEO Philippe Vann declared that "some of our competitors in Europe are losing even more money than us on every car they sell," according to The Detroit News.

Peugeot-Citroen is expected to lose more than $1 billion in 2012. Ford ( F) and GM ( GM), which owns a 7% stake in the company, are also expected to lose $1 billion or more in Europe this year.

Caldwell cited three factors to explain the U.S. auto-buying frenzy. An aging fleet is bolstering the need for new cars, credit is easily available and, Caldwell said, "New cars got people into showrooms."

GM on Tuesday touted sales of its new cars. At Chevrolet, Cruze sales rose 43% to 25,787, Volt sales rose 294% to 2,851 and Spark sales totaled 2,223. The new Buick Verano sold 4,092 units. The new Cadillac XTS sold 2,506 units and the Cadillac ATS, just arriving in showrooms, sold 611 units.

GM reported it sold 210,245 vehicles, leading to its best September since 2008.

"Inside these numbers was clear evidence that GM has become a formidable across the board competitor," said Kurt McNeil, vice president of U.S. sales operations. Nevertheless, he said, "We're very humble and staying very hungry ... the good news is we're jut getting started." GM sales rose just 1.5%, however, as pickup truck sales fell about 20%.

Investors on Tuesday bid GM shares up 2.6% to $23.68, partially on sales but also because hedge fund manager David Einhorn painted a buy picture for investors.

Ford, meanwhile, had "its best small car month in a decade," said Ken Czubay, vice president for U.S. marketing, sales and service. "Go back 10 years to September 2002 to find a comparison." Ford's total sales were flat, partially because sales of its top selling-car, the Fusion, slipped 37% to 12,300 as the 2012 model was cleared out.

The big winner in September was Toyota ( UAL), which saw sales gain 41.5%.

"The auto industry had another very encouraging month in September," said general manager Bill Fay on the Toyota sales call. Looking ahead, we see continued stability in the marketplace."

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed