=DJ 3rd UPDATE: US Auto Woes Deepen Amid Tumbling SUV Sales
(Adds Chrysler results, starting 15th paragraph; updates stock prices)
DOW JONES NEWSWIRES
The U.S. auto industry's slide grew worse in June as it reached the midpoint of a dismal year with collapsing demand for trucks and SUVs.
But late-month incentives helped keep General Motors Corp.'s (GM) decline in June sales to an 18% drop, better than the 21% drop at Toyota Motor Corp. (TM), the 28% slide at Ford Motor Co. (F) and 36% plunge at Chrysler LLC.
GM's results, well above most expectations, pushed its stock up 4%. The news also helped Ford rebound from a fresh 17-year low and push its shares briefly into positive territory, although its stock was recently down 3%.
Honda Motor Co. (HMC), like in May, was the lone bright spot last month with sales up 1.1% to 142,539, a record June for the auto maker. Car sales jumped 19% to 97,639 while truck sales fell 24%, much less than Toyota and Ford. And as they did in May, sales of the Civic and Accord cars outsold Ford's F-series pickups, as did Toyota's Camry and Corolla.
"Staying true to our core values is allowing Honda to weather the storm of rising gas prices and help consumers find shelter in our products," said Dick Colliver, executive vice president of American Honda. "Our factories are doing everything they can to produce the fuel-efficient models consumers are desperately in need of."
The declines by the other auto makers were exacerbated by three fewer selling days in June - 24 versus 27 a year ago. But $4-a-gallon gasoline also had buyers favoring more fuel-efficient cars and shunning the trucks and SUVs which have traditionally driven Detroit's profits.
In June, GM sales of cars and light trucks totaled 262,329, as light trucks fell 16% and car sales dropped 21%.
Last week, GM announced further production cuts as well as sweeping new incentives on many 2008 models - a reversal of recent strategy and a fresh sign of how badly rising gasoline prices are slamming auto makers. The company disclosed Tuesday that its third-quarter production target has been cut 15% to 900,000 vehicles, with truck production expected to be slashed by about 209,000.
For the second quarter, GM produced 835,000 vehicles, down 27% from a year ago.
GM, Ford and Chrysler have been trying for more than two years to back away from heavy sales incentives, which eat into profit margins and tarnish brands in the eyes of some consumers. But a worsening of the slump in car and light-truck sales this month is forcing the Detroit companies to go all out to halt sales declines. In hopes of spurring vehicle sales, GM offered no-interest loans for up to 72 months or cash rebates of up to $7,000.
Toyota sold 193,234 vehicles in June, with car sales down 9.4%, light-truck sales slumping 42% and SUV sales sliding 39%, though the latter was better than Ford's 55% plunge. Sales at the namesake brand fell 20%, but tumbled 30% at the luxury Lexus nameplate.
The Sequoia, however, rose 25%, as the large SUV continued its surprising winning streak. Through May, it was the only vehicle in the "large utility" segment for which sales have grown this year, according to J.D. Power.
American consumers' shunning of trucks and sport-utility vehicles in favor of smaller, more fuel-efficient cars has created an opening for Toyota, whose American product line is skewed toward compact cars, to grab market share from GM.
Ford's U.S. light-vehicle sales totaled 173,462 last month, with passenger-car sales down 12% and trucks and SUVs skidding 36% amid a 41% tumble for the F-series truck. Weak truck and SUV sales recently led Ford to push back the launch of its redesigned F-150, which was once was expected to drive the company's recovery, and led Ford two weeks ago to announce production cuts for the second time in two months and give up on ending its losses by next year.
Chrysler's sales slumped to 117,457 from 183,347, with car sales tumbling 49% to 29,858 and truck sales decreasing 30% to 87,599. President Jim Press said that, despite U.S. consumer confidence being at a 16-year low, "Chrysler is fighting back and making progress by continuing to invest in our products and aligning our volume with the market."
One of the company's main incentives - allowing customers to lock in $2.99-a-gallon gasoline for three years - is being extended through July 31 and is helping boost showroom traffic and sales of Chrysler's most fuel-efficient vehicles. But it doesn't appear to be helping the company overall, as it is much more dependent on gas-guzzlers than its rivals.
The gas crunch set off a dramatic shift among U.S. car buyers. Trucks that used to be strong sellers suddenly piled up in dealer inventories and consumers started flocking to small cars. Those had traditionally appealed to a smaller segment of the market dominated by Toyota and Honda, which had already battered the U.S. makers with their lower cost structures, higher margins and rising sales.
-By Mike Barris and Kevin Kingsbury, Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com
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(END) Dow Jones Newswires
July 01, 2008 15:27 ET (19:27 GMT)
Copyright (c) 2008 Dow Jones & Company, Inc.- - 03 27 PM EDT 07-01-08 |
