General Motors Holds Its Ground

At first glance, April was a surprisingly subdued month for auto sales in the United States: After several months of strong year-over-year gains, sales rose just 2.3% last month. And while Toyota (NYS: TM) posted a solid increase over its tsunami-crushed year-ago sales numbers, key players like Ford (NYS: F) and General Motors (NYS: GM) actually posted declines for the month.

New-vehicle sales are a key indicator of consumer confidence -- and obviously an important metric of health for auto stocks. Is it time to worry?

Not yet. Fortunately, most of these numbers are better than they look.

Why April was better than it looked
A 2.3% gain for the industry sounds tiny, but that number tells only part of the story. Because last month had three fewer "selling days" -- auto dealers are typically closed on Sundays and holidays -- than April 2011, the annualized rate of sales was actually up significantly. The "SAAR" (for Seasonally Adjusted Annualized Rate, a widely watched indicator of auto sales) came in at 14.4 million units for the month, up significantly from 13.2 million units a year earlier.

That's a healthy number, one that suggests that pattern of strong sales seen during the first quarter is continuing. But it was healthier for some than for others:

  • Ford reported a 5% decline, with executives suggesting that tight supplies constrained sales. Ford is adding factory shifts and has scheduled a big production increase. More details here.

  • Chrysler continued its stunning streak of year-over-year sales gains, with a 20.4% increase over solid year-ago results. Chrysler has now posted 25 consecutive months of increases, powered by the dramatic post-bankruptcy product-line overhaul initiated by corporate parent Fiat. Its U.S. market share has climbed to 11.9% and could climb further as its impressive new Dodge Dart compact arrives at dealers over the next few weeks.

  • Toyota posted an 11.6% gain, driven by continued strong sales of its Prius lineup and the recently introduced Camry sedan. While the company's results for the month were solid, it's important to note that April 2011 was the first of several months in which Toyota's production (and its sales) were severely affected by the tsunami that hit northern Japan last March. Still, the company appears to have recovered somewhat faster than expected.

  • Honda (NYS: HMC) sales were down a little over 2%, as the company continues to struggle with inventory issues and a product line that needs some refreshment. And Nissan sales were flat, as the company cut its spending on incentives by 13%, according to estimates from

  • Volkswagen (OTC: VLKAY.PK) sales were up a whopping 27% as the company posted its best April U.S. sales total since 1971, when the Beetle was king and VW was the largest-selling import brand in the United States. VW is on a global roll, as it rides a slew of fresh products and ramps up its push to overtake GM as the world's No. 1 automaker.

And then there was General Motors.

Behind a tough headline number, a decent month for GM
GM's total sales were down 8.2% versus year-ago numbers, but again, that's not quite as bad as it looks. GM's retail sales were essentially flat -- implying a gain of about 12%, on a daily sales-rate basis -- but its fleet sales were down 25% because of the timing of delivery of some large orders. The company had previously warned that that would be the case; it shouldn't be a concern.

What was good? Chevy's new subcompact Sonic continues to post strong gains over its (unfortunate) predecessor, the Aveo, with a 38% increase -- good enough to outsell its strong cross-town rival, Ford's Fiesta. The Buick Verano, an upscale compact introduced in November, continues to gain traction. And the Chevy Volt posted another solid month, with more than 1,400 sold -- bringing the car's year-to-date sales to nearly 5,400 units.

What wasn't so good? The Chevy Cruze, which was a big seller for GM last year, has slipped a bit -- its year-over-year sales were down over 27%, and its monthly total once again trailed Ford's Focus. Ford has hinted that its Focus sales have been constrained by supply, and is adding production in coming weeks -- the Cruze's challenges could continue.

But overall, it was a decent month for GM, though Edmunds estimates suggest that the company increased its spending on incentives to some extent. That won't help earnings, but it's not surprising -- the General is still treading water, with a number of key products awaiting replacements that won't arrive until 2013. How much of an impact will those incentives have? We'll learn a bit more when GM releases its first-quarter earnings on Thursday.

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At the time thisarticle was published Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at@jrosevear. The Motley Fool owns shares of Ford.Motley Fool newsletter serviceshave recommended buying shares of Ford and General Motors and have recommended creating a synthetic long position in Ford. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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