Hot car list by Wall Street analyst spots three coldest models on the market

August 9, 2012

One of the key tasks of a Wall Street stock analyst watching the American auto industry is to sift through as much sales data as possible every day to find hidden patterns and proofs, like a ghost hunter in an old motel. One analyst crunched some numbers to come up with what he called the hottest-selling vehicles in the United States -- but his report turns out to be more accurate at spotting the three models with the worst performance this year. 

As Business Insider noted, Morgan Stanley analyst Adam Jonas presents a graph in his report this week showing "model hotness" -- a measure that combines sales with changes in rebates and other incentives. If an automaker's boosting sales while cutting back on incentives, then a model is hot; if they're throwing money on the hood and still not luring buyers, then it's cooling off. In his most recent chart, Jonas named three models as hotter than any other: the Toyota Camry, the Mercedes M-Class sport utility vehicle and the Honda CR-V.

But there's a few issues that cloud this approach. To keep his data clean, Jonas only looks at the top three sellers for each automaker -- eliminating cars known to be in high demand such as the Scion FR-S. His approach also can't take into account vehicles whose demand is limiting supply, as Hyundai claims it's facing with the new Elantra. And some cars sales have soared from the previous year because of a rebound by Japanese automakers following the tsunami that sharply curbed output.

Yet Jonas' chart does offer a detailed picture of which cars are struggling the most. In an overall market that's growing, any high-volume model that's not selling well stands out. If sales are falling despite higher incentives, that's a sign of even bigger trouble. And by Jonas' figures, the coldest models in America are the Volkswagen Jetta, the Mercedes E-Class sedan and the Chevrolet Cruze.

Of the three, the Jetta has the worst combination of higher incentives -- namely zero-percent loans -- that haven't prevented a 10 percent drop in sales through July. Cruze sales have slipped nearly 13 percent, although Chevrolet hasn't boosted incentives as much as VW, with just a $1,000 national rebate or 3.9 percent financing. And the Mercedes E-Class sedan has 4.4 percent fewer buyers than a year ago, even as Mercedes overall has grown 13 percent this year.

The Jetta and the Cruze both suffer from the return of a fully-stocked Honda and Toyota to the market, which has sparked a fierce battle with rebates and incentives. Toyota Corolla sales are up 14 percent, and Honda and Ford have both cranked up incentives on the Honda Civic and Ford Focus to keep customers interested. As for the E-Class -- it's now among Mercedes' older models, and also facing a resurgent Lexus, along with fresher competition from BMW and Audi. Hagglers, take note.