Makers fear reduced speed ahead for sales
Automakers, reporting surprisingly robust sales in August, said Tuesday that prospects for the rest of the year were uncertain, with the housing slowdown and lending crunch posing threats to people’s ability to buy new cars.
New-vehicle sales last month were off less than 1% compared to August 2006, according to Autodata Corp. That was in sharp contrast to July, when year-over-year sales plummeted 12.3%.
The turnaround was led by General Motors Corp., which reported a 6.2% gain. Even Ford Motor Co., which saw sales drop 20% in July, did better, with a decline of 15.1%.
But automakers cautioned that economic head winds would result in another down year for auto sales in the United States. In 2006, sales declined 2.6% from 2005.
Sales of cars and light trucks -- including pickups and SUVs -- have been up and down this year as strong employment and low inflation have offset high gasoline prices and the tough housing market. The August numbers did little to clarify the overall trend.
“They didn’t really say that the consumer is much stronger than we expected, and they didn’t really say that the consumer is really weaker than we expected,” said Erich Merkle, an analyst with IRN Inc. in Grand Rapids, Mich. “It’s really a nebulous number.”
The rise in home foreclosures and the falloff in home sales have hurt auto sales because many people were using proceeds from refinancings to purchase cars. But “while credit problems are spreading a bit, interest rates on car loans haven’t changed much in the last few months,” said Bob Carter, head of the Toyota division of Torrance-based Toyota Motor Sales USA Inc.
Still, the automakers are clearly concerned that the housing market’s woes could spread to their showrooms later this year or in early 2008.
A report last week that consumer confidence had dropped to a 12-month low was especially worrisome.
The effect seems to be greatest among lower-income consumers. Sales of many luxury nameplates, including BMW, Porsche and Nissan Motor Co.’s Inifiniti brand and Ford’s Land Rover and Lincoln marks, registered strong gains in August.
The drop in gasoline prices last month may have helped boost pickup and SUV sales, which were up 3.8% in August compared with a 5.3% drop in car sales.
GM in particular benefited from the trend. Sales of its full-sized pickups jumped 26% during the month, and demand is strong for its new GMC Acadia and Buick Enclave crossover SUVs.
The automakers’ forecasts for full-year sales now range from around 16.1 million to 16.5 million. Analyst Jesse Toprak of Edmunds.com is forecasting total sales of 16.2 million vehicles, which would be a drop of slightly more than 2% from last year.
“It would be a decline,” Toprak said, “but any time they can sell over 16 million units, it’s a relatively healthy marketplace.”
Toyota’s U.S. sales fell 2.8% in August, but the Japanese automaker held on to the No. 2 position in the American market with a year-to-date market share of 16.2%. Ford, the longtime No. 2 U.S. automaker, has seen its market share fall steadily as the company sheds low-profit sales to rental car companies and corporate fleets. Its market share is 15.1% year to date.
In another industry development Tuesday, there were published reports that the United Auto Workers union was open to establishing a trust fund for retiree healthcare benefits if it could reach an agreement with the U.S. automakers on funding terms.
Wall Street analysts have said such a move -- if funded at a steep enough discount to estimated healthcare liabilities -- could shift risk from the strained balance sheets of the automakers and boost future earnings.
Talks on a new UAW contract began in July. The current contract expires Sept. 14.
martin.zimmerman
@latimes.com
Reuters was used in compiling this report.
