April has kicked off with great news for Ford (NYSE:F) and General Motors (NYSE:GM), with strong March auto sales having boosted share prices. The outperformance from both companies in their announcements last Friday has helped boost auto sector shares by 4% since last Thursday.
Toyota (NYSE:TM) was less lucky, however – its vehicle sales slipped last month and parts shortages stemming from the crisis in Japan will force the automaker to close its North American plants later this month.
Toyota’s March sales were down nearly 6% over the same month last year. While last year’s stronger numbers were fueled in part by generous post-recall incentives, Toyota was the only major carmaker to post lower sales for March.
Perhaps worse news for the world’s largest vehicle manufacturer: Toyota said Monday that it will have to close its North American manufacturing plants later this month because of parts shortages. The company said that 233 vehicle parts are sourced from suppliers that sustained substantial damage in the Japan crisis that began with the March 11 earthquake and tsunami and continues with the crippled nuclear plant. Toyota shares were off 2% on Tuesday.
Meanwhile, Ford’s stock got a boost from sales figures that showed it zipped past GM for the first time in more than a year to take first place in the March vehicle sales race.
Ford’s shares are up about 5% since March 29.
Ford sold 212,777 vehicles last month – an increase of more than 19% from March 2010. And it boosted sales while raising prices by an average of $177 per vehicle to cover increased raw materials costs.
But the slip from first place didn’t affect GM’s momentum. The company’s sales totaled 206,621 vehicles in March, an increase of 6% over the same month last year.
Despite the growth in sales last month, however, automakers face three key challenges for the remainder of the year:
- The likelihood that all U.S. vehicle manufacturers will have their operations hampered to a significant degree because of supply chain disruptions in Japan;
- Rising gas prices could diminish demand in the second half of the year; and
- A combination of factors including inflation, volatile oil prices and multiple crises in the Middle East could cause the fragile U.S. economic recovery to relapse. That would result in a significant hit against high-ticket consumer goods such as cars and light trucks.
As of this writing, Susan J. Aluise did not hold a position in any of the stocks listed here.
