U.S. auto sales seen up for October

By Kevin Krolicki

Reuters
Monday, October 30, 2006; 7:19 PM

DETROIT (Reuters) - U.S. auto sales are on track to finish October stronger than a year ago, but without enough momentum for Detroit to sell out its inventory of 2006 models, analysts said on Monday.

Automakers are due to report October sales on Wednesday. The data will be closely watched for how the traditional Big Three U.S. car companies are managing unsold 2006 models.

The persistent inventory problem is particularly pressing for Chrysler Group, the U.S. arm of DaimlerChrysler AG (DCXGn.DE), which ended September with 533,220 unsold vehicles, or an 82-day supply on its dealer lots, the highest tally in the industry.

Chrysler's dealer inventory in September was down 7 percent from a year earlier but remained higher than inventory levels for GM, which had a 76-day supply of cars, and Ford, which had 74.

However, analysts said lower gas prices may have helped General Motors Corp. (GM.N), Ford Motor Co. (F.N) and Chrysler sell some of their pricier trucks and SUVs, which were shunned by consumers for most of this year.

Overall sales are also expected to look better in comparison to October 2005, which marked a seven-year low for U.S. auto sales after a summer of showroom discounts by GM, Ford and Chrysler, analysts said.

Goldman Sachs analyst Robert Barry forecast overall sales would come in at an annualized rate of 16.4 million units, up from 14.8 million a year earlier.

Barry forecast a 26 percent year-on-year increase for GM, which he said would mark a "modest" increase because of the No. 1 automaker's 23-percent sales decline a year earlier.

He said he expected Ford to post a 14-percent sales gain, which he called "weak" given its 23-percent drop a year ago.

Bear Stearns analyst Peter Nesvold forecast an 18-percent sales gain for GM and a 10-percent rise for Ford. "Inventory appears to be building for the Big Three and incentives are picking up modestly," he said.

Executives have been cautious in their public assessments.

"We look a lot like last (September)," GM sales analyst Paul Ballew said last week. "We're seeing a pretty strong truck mix. We are having a good month on full-size pickups."