U.S. auto sales hit 15-year low
DETROIT (Reuters) - U.S. auto sales plunged in June to a 15-year low, but a month-end clearance sale helped General Motors Corp retain its No. 1 spot and steer clear of the wipeout many had feared, sending its shares higher.
Record gas prices and declining trade-in values for big trucks and SUVs hit truck sales hard while major automakers, including Toyota Motor Corp, struggled to keep up with demand for some popular smaller cars and hybrids.
GM was the industry’s main surprise after a sale featuring zero percent financing for six years allowed the U.S. automaker to avoid losing sales leadership in the month to Toyota.
In a reversal of recent trends, Toyota trailed GM in June with a 21-percent sales decline, reflecting a 31-percent drop in sales of its trucks like the Tundra pickup.
Equally damaging, sales of Toyota’s hybrids including the market-leading Prius hybrid dropped 27 percent as dealer inventory ran short of demand.
“GM was better than expected, and it looks like Toyota missed a big opportunity in the month,” said Jesse Toprak, an analyst with industry-tracking Web site Edmunds.
Ford Motor Co sales were down 28 percent, while Chrysler LLC sales fell 36 percent, the weakest result in the industry. Now controlled by Cerberus Capital Management CBS.UL, the privately held automaker relies on light trucks for almost 70 percent of its sales.
By contrast, Honda Motor Co, which boasts the most fuel-efficient vehicle line-up among major automakers, bucked the downturn and posted a 1 percent sales gain.
“MOMENTUM”
“We felt that was a very successful month-end merchandising program,” GM’s North American sales chief Mark LaNeve said, referring to its interest-free loan deal. “It was six days long and really helped build dealer and customer momentum.”
GM and Ford said they expected that the U.S. light vehicle sales rate would be near 14 million units for June on an annualized and adjusted basis.
That would be down from 14.3 million in May but still better than the most bearish forecast for a sales rate near 12.5 million units, a result that would have represented the weakest tally in 15 years.
As expected, sales for pickup trucks and SUVs plummeted in the month and the sharp decline in the once market-leading vehicles was only partly offset by stronger sales of small cars and vehicles with more fuel-efficient four-cylinder engines.
GM’s chief sales analyst Mike DiGiovanni said the industry-wide sales tally could have been flat from the month earlier if the supply of smaller vehicles had kept up with demand.
“We conservatively estimate that the industry probably wanted to run at 14.3 million (units) but was constrained because of availability on some of the smaller mid-sized-and-below vehicles,” he said.
An urgent question for creditors and investors has been whether the cash-strapped U.S. auto industry is headed for an even weaker second half for sales, weighed down by the continued housing slump, tighter credit and high gas prices.
“Consumer fundamentals and consumer confidence deteriorated as the first half unfolded,” said Ford marketing chief Jim Farley. “The economy enters the second half of the year with a notable absence of momentum and a high degree of uncertainty.”
source: Reuters