The Spies give you a heads up before tomorrow's announcements
From a confidential analysts report to investors
Automakers will report May U.S. auto sales results tomorrow. We are expecting another weak month for the U.S. Big Three, and a light vehicle SAAR of approximately 16 MM (slightly better than the 15.7 MM we derived from our mid-month survey, but weak relative to the first four months of this year and the 16.5 MM achieved in May of last year). We estimate GM sales will decline in the -12% to -13% range, Ford -8% to -10%, and Chrysler -15%. We expect the Asian OEMs to collectively be up around 10%, with Toyota leading the way (up mid-double digits), followed by Honda (up 10%). Nissan could be down 6%. Besides the overall sales results, we expect the Street to focus on mix trends. We are particularly focused on pickup trucks--a critical earnigns generator for the Big Three U.S. automakers which has recently begun to show signs of stress. GM and Ford will also reveal Q3 production plans when they release numbers tomorrow. Given the company's market share decline, already high inventories (86 days at the end of April), and a stated desire to avoid expensive (and brand eroding) incentive campaigns, we believe there's risk of double digit cuts to GM production in the back half of 2006.
Suppliers with significant GM exposure appear to be at risk of earnings misses in the back half.