Auto sales: CarMax warning continues to cool GM shares, Ford shares ahead of third-quarter reports

U.S. auto sales hold up in the third quarter as vehicle inventory slowly improves, but new headwinds arise. A CarMax demand warning continued to weigh on GM and Ford shares on Friday.

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General Motors (GM), Ford (F), Stellar (STLA), Toyota Motors (TM) and Honda engine (HMC) is among those who want to reveal sales in September and the third quarter. They must report from Monday 3 October.

The annual pace of US new car sales in September is expected to reach 13.3 million units, roughly in line with August, Cox Automotive estimates. By volume, sales in the third quarter are set to reach almost 3.4 million units, slightly down both year-on-year and quarter-on-quarter, after a sharp decline in the second quarter.

Cox expects GM, Ford and Tesla to be among the biggest winners in a third-quarter market “still stuck in low gear” as inventory slowly improves.

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Auto stocks sold off hard on Thursday and fell further on Friday. Used car dealer CarMax (KMX) largely missed earnings on Thursday, citing “reasonable challenges.” Moody’s downgraded the global auto industry to negative from stable, also citing customer affordability issues due to higher prices and a weaker economy. It also noted higher costs for automakers.

Sometime in early October, Tesla (TSLA) will also report global production and delivery figures for the third quarter.

Here’s how automakers are expected to perform in Q3, according to Cox Automotive. The results show sales volume, as well as sales growth or decline compared to a year ago.

General Motors

Sales estimate for the third quarter: 539,028 vehicles, up 21.6%.

Results: Come back Monday.

GM shares fell 2.1% on Friday as the major indexes tried to rally. Shares fell 5.65% in Thursday’s stock market action, after snapping a six-day losing streak on Wednesday. They recently broke below the 50-day moving average and are staying below the 200-day mark.

In early September, GM CEO Mary Barra reportedly said in a TV interview that she sees the chip shortage lasting “into next year, maybe a little beyond.”

Traditional automakers continue to accelerate on electric vehicles, which need more chips.

Recently, GM started initial deliveries of two important new electric cars, the Lyriq SUV and the Hummer pickup. Investors will be watching for signs that production has picked up or will soon. An Ultium battery factory finally started production recently.

CarMax stock was up 0.6% on Friday. Shares fell nearly 25% on Thursday to their lowest level since April 2020.

Toyota Motor

Sales estimate for the third quarter: 513,846, down 9.2%.

Results: Come back Monday.

The Toyota Motor share lost a further 2.2 percent on Friday. It fell 2.3% on Thursday, hitting a 23-month low.

Ford Motor

Sales estimate for the third quarter: 473,595, up 19.1%.

Results: Check in later.

Ford shares gave up 2.2 percent on Friday. Shares fell 5.8% on Thursday, after ending a six-day losing streak on Wednesday. They remain below the 50- and 200-day lines.

Stellar

Sales estimate for the third quarter: 388,481, down 5.5%.

Results: Come back Monday.

Stellantis shares fell 4.8% on Thursday and another 1.3% on Friday.

Honda engine

Sales estimate for the third quarter: 211,326, down 38.9%.

Results: Come back Monday.

Honda shares retreated 3.2% Thursday to a two-year low. The stock fell a further 1.9 percent on Friday.

Tesla

Sales estimate for the third quarter: 126,844 premium and luxury electric cars in the US, up 38.3%.

Results: Tesla will report global Q3 deliveries soon, but won’t break out US sales.

Tesla shares fell 6.8% on Thursday, falling sharply from near the 50-day and 200-day lines. Shares gave up another 1.2% on Friday.

Prospects for car sales in the fourth quarter

Analysts at JD Power and LMC Automotive expect production constraints to continue in October and lead to a “somewhat lumpy” fourth quarter. On Wednesday, analysts at Cox Automotive again lowered their full-year forecast for 2022, now forecasting 13.7 million units, down more than 9% from 2021 and the lowest level in a decade.

These warnings come after Ford warned on September 20 that it could have 40,000-45,000 partially built vehicles in inventory at the end of the current third quarter, awaiting parts needed for completion. It still expects to complete and deliver these vehicles in Q4.

Find Aparna Narayanan on Twitter at @IBD_Aparna.

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