GM Leads Automakers with Highest Profit Gain

Posted: Apr 29, 2011 10:04 a.m.

May is almost here, which means that automakers are getting ready to post their April sales numbers. In preparation, industry analysts are predicting the figures for April. Edmunds.com has a rundown on what’s going on with Chrysler, Ford, Kia, Hyundai, Honda, Toyota and Nissan.

Based on Edmunds’ predictions, General Motors is the only automaker that will see a sales increase from March 2011 to April 2011. “General Motors is poised to regain the sales crown in April after Ford briefly wrested it away in March,” said Edmunds.com Senior Analyst Michelle Krebs. “In fact, GM was the only major automaker to show a month-to-month sales increase over March, even as it -- along with the rest of the industry -- pulled back a bit on incentive spending.” GM should sell 219,700 units in April 2011, up 19.6 percent compared to a year ago and up 6.3 percent compared to March 2011.

If Edmunds is correct, GM will sell 28,700 more vehicles than Ford, which follows GM in terms of total units sold in April 2011. While Ford, Honda, Nissan and Toyota sold fewer cars in April than they did in March, every automaker has sold more cars than it did in April 2010, which means the industry as a whole continues to improve. For example, Edmunds predicts that Nissan will sell 82,600 vehicles in April 2011, a gain of 29.5 percent compared to the same time last year.   

With vehicle sales dropping, Edmunds.com Senior analyst Jessica Caldwell predicts that profits will continue to plummet throughout the summer and into the close of 2011. “As inventories rapidly deteriorate, April could be the last month that we’ll see strong sales numbers until late summer or early fall,” she states. “May and June are traditionally high-volume months, and with anticipated supply constraints – especially on the fuel-efficient vehicles that have been in higher demand with spiked gas prices – inventories will be exhausted further. The big unknown is how this market will adjust to supply restrictions, when demand has been the key problem for the past three years.”

If you’re in the market for a new car, your main concern is finding the car you want at the best price. Compared to March 2011, the incentives automakers post in May probably won’t be as enticing. Edmunds.com says, “Average automaker incentives in the U.S. are estimated to be $2,100 per vehicle sold in April 2011, down $268, or 11.3 percent, from March 2011, and down $533, or 20.2 percent, from April 2010.” This trend is likely to continue.  

Chrysler is making news beyond its sales numbers. On Thursday, the automaker said it would repay more than $7 billion in government bailout loans. This new initiative occurs amid a 22.5 percent increase in profits compared to the same time last year and new models like the Chrysler 200. Chrysler’s April incentives weren’t impressive, but as the automaker tries to regain its footing, get out of debt and develop a strong reputation with the American public, we may begin to see more incentives. But, in a conversation with AFP, Edmunds.com analyst In Drury states that “'Chrysler still depends on the sale of very large cars and trucks, and this is going to hinder their progress in the upcoming months as fuel costs escalate.’" With gas prices close to a national high of four dollars a gallon, shoppers want small vehicles, not large ones.

If you’re shopping for a fuel-efficient small car from a Japanese automaker, you may have a hard time getting a Honda or Toyota, and you probably won’t get a good deal. Honda’s quarterly profit, for example, fell about 38 percent, according to The Boston Globe because of decreased production and a limited supply chain. With sales dropping and fewer cars on the market, Honda probably won’t offer attractive incentives. Not all Asian brands are suffering. The Boston Globe adds, “Hyundai Motor's first-quarter profit rose 46 percent as gains in overseas vehicle sales countered a sluggish domestic market.”

This spring has proven a busy time from the automotive industry both here and abroad. As you shop for a new car make sure you check our May car deals next week to see how much money you’ll save on the model you want.

Shopping for a new car? Check out the U.S. News rankings of this year's best cars. Then, look for a great deal on a new car by checking out this month’s best car deals. Also, be sure to follow us on Twitter.