Car Stocks Up In Spite of Mixed September Sales Reports

NEW YORK, Oct. 1, 2002-CBS.MW; Shares of the Big Three surged along with the broader market Tuesday after the world's two biggest automakers, Ford Motor and General Motors reported a decline in September U.S. sales while No. 3 Chrysler Group notched a gain.

Chrysler Group said September U.S. sales rose 18 percent on Tuesday, boosted by equal increases in cars and trucks, while General Motors reported a 13 percent drop and Ford Motor Co. tallied a 5 percent decline.

But the top two automakers -- market leader General Motors and Ford, its nearest rival -- caught the ire of Lehman Bros. as the firm's auto analyst cut price targets and profit projections Tuesday for both General Motors and Ford Motor. Concerns over pension liability brought on by a weak U.S. stock market were behind the move.

General Motors dips as trucks give way.

GM reported that September sales fell 13 percent to 312,276 vehicles with an 18 percent slide in car sales and an 8 percent fall in trucks. The total figure still eclipses any other automaker's results.

"Our September sales performance was softer than expected," said Bill Lovejoy, GM sales and marketing executive, who noted the company's strong summer sales. By brand, Cadillac and Saturn reported an increase in sales from last year. The other lines fell.

GM reported 23 selling days this September and 25 last year.

Production plans at home for the fourth-quarter were not updated, the No. 1 automaker said. Europe's levels were raised by 7,000 vehicles to 472,000.

In total, third-quarter sales were up 10 percent from last year.

GM said Tuesday that it will offer 60-month zero-percent loans on the company's 2002 and 2003 cars and minivans, but not its trucks. The deal is good through Oct. 31. Other reduced rate loans will be available and a cash rebate will be offered on 2002 and 2003 trucks.

Ford Motor sales fall, market share rises

Ford's September sales fell 5 percent from last year to 280,319 units amid a 9.9 percent decline in car sales and a 2.2 percent dip by trucks.

Ford blue-oval brand sales came in at 232,674 units, down 6.3 percent even as the Explorer and Focus rose strongly.

The second-highest volume brand Mercury had the greatest percentage decline: down 25 percent to 18,554 vehicles. At the high end, British brands Land Rover and Jaguar surged on sales of their lower-priced models. "That is the first time since we acquired Land Rover ... that all four of our luxury marks posted increases in the same month," said George Pipas, Ford sales analyst and spokesman, during a sales conference call.

In that same month, Pipas said Ford's market share rose in the U.S. to 22 percent -- the year's strongest level. That figure is in line with expectations.

Ford also extended its free financing offer on many of its vehicles on Tuesday, continuing a trend that keeps on drawing buyers into the showroom.

Ford said it was providing data on 24 selling days this year and last.

Chrysler Group sales surge, brand declines

Chrysler Group said Tuesday that September sales came in 18 percent higher than last year's level to total 165,397 cars, trucks and minivans. Both cars and trucks rose 18 percent but trucks took the volume title at 125,413. Dodge sales rose 30 percent to 95,583. Jeep rose 14 percent to 36,643 vehicles. However, Chrysler sales came in at 33,171 units, down from 36,106.

Looking at the quarter itself, the company said sales rose 12 percent from last year.

"The September improvement of 18 percent can be attributed to the product strengths of our Chrysler, Jeep and Dodge brands, our seven-year/70,000 mile powertrain warranty, competitive incentives and our Five Star dealer organization," said Chrysler sales executive Gary Dilts in a statement.

Mercedes-Benz said Tuesday that September sales came in at 17,480 units, up 13 percent from last year and above 2000's record September. The C-class and E-class models made up the majority of the sale while SL coupe sales jumped 333 percent to 1,079. For the certified used vehicles, sales rose 5.1 percent to 3,212.

Chrysler said there were 23 selling days for September 2002 vs. 25 in 2001.

Street splits on sales data

The monthly figures should give industry watchers insight into how demand is holding up among consumer and business customers.

Already this week, Lehman's economists said that those numbers should point to waning sales.

"After annualized sales of more than 18 million in both July and August, vehicle sales have nowhere to go but down," said Ethan Harris, co-chief economist at Lehman.

Looking further ahead, Stephen Girsky, Morgan Stanley's auto analyst, said he expects stronger sales in 2002 than initially forecast. He forecasts annualized U.S. sales of 17 million vehicles, up from 16 million.

The strength has shown up in the third quarter, which includes September, he remarked. But for 2003, Girsky expects about 16.4 million vehicles to be sold.

In recent action, shares of Ford were up 3 cents to $9.83.

GM gained $1.98, or 5 percent, to $40.88, while U.S.-traded shares of DaimlerChrysler were the strongest percentage gainer, rising $2.83, or 8.4 percent, to $36.34.

Among Japanese automakers, Toyota Motor lost $1.34 to $49.76 but Honda Motor rose 67 cents to $20.54.

And among the parts and components firms, there were mostly losses. Delphi gave up 7 cents to $8.48; Visteon retraced by 65 cents to $8.82; and BorgWarner fell $1.02 to $48.62. Dana lost 8 cents to $13. Pension pangs

Lehman's Darren Kimball, who picked up coverage of Ford and GM on Sept. 18, also highlighted concerns about the top echelon of Ford's brands, known as the Premier Automotive Group. The stable includes Jaguar, which Ford said is to lose about half a billion dollars this year, as well as Land Rover's off-road line, Volvo and Aston Martin.

Lehman also cut the price target on Ford to $8 a share from $9 and on GM to $41 from $45.

Separately, UBS Warburg lowered its price target on Ford shares to $7 from $9.50 because of concerns about the No. 2 automaker's "considerable operational problems." Analyst Saul Rubin expects a more-drastic restructuring of the manufacturing operations lies ahead for Ford. "The sooner the better," noted Rubin.

The concerns over pension exposure are well known on Wall Street, even for industrial firms outside the auto sector.

Ford has defended its cash position when faced with this criticism. GM has acknowledged the focus it has on managing the pension liability, as has the industry.

"The real concern is on the balance-sheet side," noted Paul Ballew, executive director of market and sales analysis at GM, in an interview on Monday.

August Cole is spot news editor at CBS.MarketWatch.com in Chicago