November a hard sell for Chrysler

DETROIT — Auto industry analysts are divided on how November’s sales are shaping up, but they agree on one thing: The month is likely to be a lousy one for Chrysler.

Jesse Toprak, chief economist for Edmunds.com, a research site for car buyers, estimates that based on preliminary data from dealers, industrywide sales will be 6 percent higher compared with November 2005, with all of the top six manufacturers reporting gains except for DaimlerChrysler AG’s Chrysler Group.

But judging from the slow traffic at the Web site of Kelley Blue Book, which tracks auto pricing, that firm predicts a down month compared to a year earlier. Through the first three weeks of November, inquiries dropped even for Toyota Motor Corp., which has posted sales gains all year, said Jack Nerad, executive market analyst.

Although he was reluctant to make specific predictions, Nerad said traffic on his company’s Web site generally corresponds to sales data when it is released by the automakers.

November, he said, traditionally is a low sales month, and this year, traffic has been lower for nearly all manufacturers.

But a small shift back toward trucks and sport utility vehicles that began when gas prices started to fall in September likely continued in November, according to the analysts.

“We know that is the case. There is some movement back there,” said Nerad, adding that most automakers have put incentives on trucks and SUVs. “We should see a rebound in those two categories.”

Toprak said data from the first three weeks of the month show Toyota sales up 17.7 percent, and although the final week could change things, he expects the Japanese company to continue its strong growth.

“It seems like nothing can stop them. Everything’s lining up right for them,” Toprak said.

The whole industry may look a little better because November 2005 was relatively weak, the analysts said. Automakers will report their sales data on Dec. 1.

Toprak predicted that Chrysler’s sales would be down 3.9 percent.

He also expects to see a small rebound in November sales of trucks and SUV, a trend he predicted would accelerate in December as snowfall brings out buyers seeking four-wheel-drive capability.

But he also believes that many consumers still fear a return to $3 per gallon gas, and that’s what continues to drive Toyota’s sales.

“They certainly benefit from a large portfolio of vehicles with high gas mileage,” Toprak said.

By contrast, both Toprak and Nerad see Chrysler’s woes continuing in November because even with several new product rollouts, the company is still is overly reliant on trucks and SUVs. Toprak said Chrysler may continue to struggle until it replaces more older models sometime next year.

“Just the fact that many of their products are toward the end of their life cycle, there’s a natural decline in demand anyway,” he said.

The Chrysler Sebring mid-sized sedan, which gets up to 32 miles per gallon on the highway, began appearing in showrooms this month. Excluding the Sebring, the Dodge, Chrysler and Jeep brands have only two other models that get more than 30 miles per gallon of gasoline.

Chrysler, which had bloated inventories of some 2006 models last month, should see those numbers decline because of large incentives that run above $7,000 on some models, Toprak said.

Merrill Lynch analyst John Murphy said Chrysler likely will look to fleet buyers to reduce its inventory.

In a note to investors, he also predicted that leasing would rise in the future because other incentives, particularly low-interest financing, are becoming more expensive for automakers.

Toprak said the preliminary numbers suggest General Motors Corp. will report a 9.2 percent improvement in November sales, with Ford Motor Co. showing an increase of 2.2 percent.

GM should have a good month because its redesigned 2007 SUVs are selling well, and its new Chevrolet Silverado and GMC Sierras are hitting showroom floors, Toprak said.