GM, Ford Sales Off But Industry Rebounds
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General Motors Corp. (GM) and Ford Motor Co. (F) reported weaker U.S. July sales on Tuesday, but strength among some of their Japanese rivals helped drive industrywide sales up sharply from a dismal June.
While GM's sales fell 3.4 percent, the decline was not as much as in some previous months and July represented the best month of the year so far for the world's largest automaker. Ford's July sales fell 6.8 percent.
The U.S. market share of Detroit's traditional Big Three automakers ended July at 59 percent, close to an all-time low as they continue to lose share to foreign brands.
Among foreign-based automakers, Toyota Motor Corp. (7203) said its July sales rose 13.7 percent and Nissan Motor Co. Ltd. (7201) said sales jumped 31 percent, giving the company its best U.S. sales month ever.
Buoyed by high incentives and low interest rates, industrywide light vehicle sales hit a seasonally adjusted annual rate of 17.2 million for the month, off 1 percent from July last year.
That was down from a 17.8 million annual rate in May, when car sales made their strongest showing of the year so far. But it was much better than a 15.4 million rate in June, when sales plunged to a nearly six-year low.
Gary Dilts, senior vice president for sales at DaimlerChrysler's (DCX) (DCXGn) Chrysler division, said the industry was holding up well overall.
Speaking in a conference with Wall Street analysts and reporters, Dilts noted that "nuclear levels of incentives" were being used to bolster sales across many vehicle segments, however.
Heavy discounting has eroded profits for virtually all players in the hypercompetitive U.S. auto industry, but the Big Three have been the leading victims of a protracted price war.
Autos account for roughly one-fifth of U.S. retail sales, and the drop in June car sales helped U.S. consumer spending for the month take its biggest plunge since September 2001, according to a government report issued on Tuesday.
Results at Ford, the second-largest U.S. automaker, exclude its import brands and some medium- and heavy-duty trucks and were adjusted by Reuters for the number of selling days.
Ford and GM have seen their inventories of unsold vehicles swell to near-record highs in recent months, and analysts have said poor July sales could force them to cut production later this year.
GM sweetened its consumer incentives program on Tuesday, and said it was offering cash rebates of up to $2,500 on many of its 2005 model vehicles, in a bid to boost sales going forward.
Chrysler has been alone among Detroit automakers in gaining market share this year, boosted by the success of its new Chrysler 300 flagship sedan. Chrysler's July sales were up 2 percent.
Dilts said Chrysler also raised its incentives on Tuesday, adding $500 to the cash rebate on its 2004 model Durango sport utility vehicle, bringing the total rebate up to $5,000.
Ford economist Jarlath Costello, who noted that consumer confidence strengthened in July, said on a conference call the economy should improve through the second half of the year, helping autos and retail sales overall.
"The fundamentals that drive consumer spending, namely income and wealth, are supportive," he said.
"Despite higher energy prices in the second quarter, households still have the benefit of a 4 percent increase in real income compared with a year ago and companies are adding to payrolls, so prospects for further income gains are encouraging." |
