Chrysler new-car sales in May miss estimates

DETROIT, Fri Jun 1, 2012 – Chrysler Group posted a 30 percent increase in May new-car sales in the U.S. market but fell short of what analysts had expected.

Chrysler, controlled by Italy’s Fiat, reported May sales of 150,041 vehicles, up from 115,363 in the same month last year. While it was the best May sales performance for Chrysler in five years, the results were below several analysts’ estimates.

The rest of the U.S. auto industry is scheduled to report sales results later Friday. Economists polled by Thomson Reuters expect an annual sales rate for the month of 14.5 million vehicles.

Some industry officials expect the rate to be lower, however, as warmer weather earlier in the year pulled demand forward and led to stronger-than-expected sales. In addition, falling gas prices have reduced the pressure on consumers to get rid of gas-guzzlers and buy more fuel-efficient cars.

Auto sales have been one of the bright spots in the economy for several months and the monthly sales results offer an early snapshot of consumer demand.

Sales have shot up this year despite cooling consumer confidence and mixed economic data that illustrates how shaky the recovery has been over the last three years.

One factor fueling the sales growth has been Americans’ increasing need to replace their aging cars and trucks, which are now a record 10.8 years old on average.

Higher fuel prices in the first quarter prompted some consumers to swap older, less fuel-efficient models to lock in fuel savings. According to Swiss bank UBS, 63 percent of dealers said higher gasoline prices increased demand in the first quarter.

With gas prices falling again, the pace of new-car sales may moderate in the second and third quarters, but the underlying consumer appetite for new cars and trucks as a result of pent-up demand remains strong, UBS analyst Colin Langan said.

Wendy’s/Arby’s agrees to sell most of Arby’s to Roark Capital

DOW JONES NEWSWIRES − Wendy’s/Arby’s Group Inc. agreed to sell most of its struggling Arby’s chain for $130 million in cash to a group led by private-equity firm Roark Capital Group in a deal that leaves it with an 18.5% ownership stake in the fast-food restaurant.

Wendy’s/Arby’s turnaround efforts at Arby’s have helped improve sales, though the company had been under pressure to sell Arby’s because its performance had been lagging until recently. The company said recently it had received multiple bids for the chain.

Under the deal, expected to close in the third quarter, Wendy’s/Arby’s will receive about $130 million in cash, and the 18.5% stock interest in Arby’s is valued at about $30 million. Roark will assume about $190 million of Arby’s related-debt. The transaction triggers a tax benefit of about $80 million to Wendy’s/Arby’s. The parties said the deal has a total value of about $430 million.

Roark will invest about $180 million at the closing, covering the cash portion of the deal, transaction costs and capital for Arby’s. Roark also committed to spend up to an additional $50 million through 2013 in capital.

Wendy’s/Arby’s in May reported that its first-quarter loss narrowed as revenue edged up amid sales growth at Arby’s. However, it lowered its full-year earnings estimate owing to significantly higher commodities costs.

Atlanta-based Roark on Monday also said it has acquired Il Fornaio (America) Corp., owner of the casual-dining chain Corner Bakery Cafe and the upscale Italian Il Fornaio Restaurants & Bakeries business. Terms of the deal weren’t disclosed.

Roark’s food and restaurant holdings also include Focus Brands–parent of chains such as Cinnabon and Carvel Ice Cream.

Wendy’s/Arby’s shares closed Friday at $4.52 and were inactive premarket.