There’s nothing like upward momentum when wooing investors. General Motors, planning one of America’s largest-ever stock offerings this year, can trot out plenty of graphs pointing up and to the right, but a critical one may look less impressive by the time of its roadshow. US car sales are decelerating just as flattering comparisons drop out of the equation.
GM put a positive spin on June sales, noting that all four brands saw unit growth of at least 36 per cent versus June 2009. But the elimination of other brands allowed existing ones with similar vehicles to cannibalise sales. Overall unit growth was just 12 per cent, which was one of the worst months in decades for Detroit. Ford’s growth of 13 per cent was also slightly weaker than expected although Chrysler, Detroit’s smallest and least transparent manufacturer, surprised analysts with a 35 per cent gain. Overall US retail sales for all manufacturers probably only grew by 10 per cent year on year after stripping out a one-third jump in fleet sales, says Credit Suisse.
Growth is about to look less impressive still as the “Cash for Clunkers” car scrapping scheme enters the year-on-year comparisons. The programme began in late July 2009 and ended a month later, producing a seasonally-adjusted annualised rate of 11.2m and 14.1m vehicles for those two months versus just 9.7m in June 2009. If last month’s anaemic 11.1m pace continues then Detroit will go ex-growth for at least a couple of months. Consumers have been slow to get sales back to the 12.5m that keeps America’s car fleet constant, much less the 16m figure typical of the boom.
The US Treasury will still be able to flog GM, but buyers, not seeing the turbo-charged model they expected, may demand an appropriate discount.
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