U.S. Vehicle Sales Decline 2.8%
Dragged down by big declines at General Motors Corp. and Ford Motor Co., U.S. auto sales dropped 2.8% in November despite a fresh round of price cutting aimed at wooing customers who didn’t buy new cars or trucks during the summer’s incentive wars.
In contrast to the sales declines among American automakers, many importers posted gains for the month. Asian automakers continued their assault on the Michigan-based Big Three and captured a 39% share of the U.S. market, just short of October’s record 40%. The domestic brands saw their collective market share drop to 53% for November.
Imports have been gaining steadily for decades, but the pace has picked up in the last three years, led by surging Asian automakers such as Toyota Motor Corp., Honda Motor Co., Nissan Motor Co. and Hyundai Motor Co.
November performance was affected by high gasoline prices, which slammed sales of large pickup trucks and sport utility vehicles. Another factor was what Ford market analyst George Pipas called “a lack of customers” after the summer blowouts that set sales records in June and July.
But the sinking fortunes of the American auto companies and the soaring of Asian rivals also “is an example of what happens when you build vehicles people want to buy,” said George Peterson, president of AutoPacific Inc., a Tustin-based automotive market research firm.
“It’s a lot easier to sell when people have confidence in the reliability of your vehicles,” he said. “Detroit is catching up, but the Japanese, particularly, have a solid reputation for dependable cars and trucks.”
Ford’s sales were down 14.7% from a year earlier, GM fell 7.6% and DaimlerChrysler’s Chrysler Group was off by 2.7%.
Toyota reported a 10% increase in sales in November, with big gains for its fuel-sipping Prius gasoline-electric hybrid and a redesigned Lexus IS luxury sedan.
Honda’s sales were up 10.8% as its Ridgeline pickup and redesigned Civic sedan caught buyers’ attention. South Korean automaker Hyundai posted a 12.5% gain, led by its redesigned 2006 Sonata sedan.
BMW, with sales up 14.2% on the strength of its new 3- and 5-Series sedans, led the major European brands.
Among the major import brands, only Nissan posted a decline, with sales down 3.9% as customers walked away from the company’s large pickups and SUVs.
Indeed, November sales were dragged down by a continuing slump in demand for most manufacturers’ mid- and full-size SUVs. The slump was fueled not just by high gasoline prices, but also by changing consumer tastes: Car-based “crossover” SUVs that feature a smoother ride and better handling are beginning to replace traditional truck-based models on shoppers’ wish lists.
Ford’s mid-size Explorer, one of the most popular SUVs in the country, was relaunched with a full redesign two months ago. Nonetheless, the vehicle’s sales plunged 52% to a 15-year low.
Not even Toyota could escape. Sales of its Sequoia SUV fell by almost 11%.
Nissan’s Titan pickup is an example of what can happen when motorists start factoring gasoline prices into their buying decisions. Sales of the truck, which has only one available engine -- one with 305 horsepower that delivers 14 miles per gallon in city driving -- were down 27% for the month. Toyota’s full-size Tundra pickup, which offers a choice of engines including one that delivers 18 mpg in city driving, posted a 25.4% gain.
Although gasoline prices are down substantially from the $3-a-gallon average set in September, regular grade in most of the U.S. still is running about 20 cents a gallon more than it did a year ago; in California the difference is about 18 cents a gallon.
Fuel prices didn’t much reduce sales of other full-size pickups because most buyers rationalize the vehicles as necessities for work or active lifestyles.
Ford’s F-Series truck was the top-selling passenger vehicle in November, followed by Chevrolet’s Silverado. Dodge’s full-size Ram pickup was No. 4.
Overall November auto sales also were hurt by the hugely successful employee discount programs that American automakers extended to all buyers this summer. The bargains accelerated many buying decisions, a situation the industry calls “pull-ahead.”
November was the second straight month of “an ugly period of payback” from sales pulled ahead in the summer, said Ford analyst Pipas.
Burnham Securities analyst David Healy said he expected to see the pull-ahead effect hurt sales though January.
To help ease the pain of sagging market share, Ford and GM said they would cut planned production for the fourth quarter by 20,000 vehicles each.
That’s a negligible trim for GM but a 2.5% decline for Ford, which said it also would reduce planned production for the first quarter next year by 2.5% to avoid flooding the market with vehicles it couldn’t sell. Most of the trims at both companies would be SUV models.
To keep sales moving in November, GM, Ford and Chrysler boosted incentive spending, with GM launching a “Red Tag” sale, offering discounts of more than $10,000 on some of its largest SUVs. Chrysler offered debit cards valued at about $2,400, while Ford launched a “Keep It Simple” promotion that reduced prices on most vehicles.
Analysts expect even more discounting this month. Chrysler Group said Thursday that it was adding a $1,000 discount on 2005 models and as much as $500 on 2006 models through Jan. 3.
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In the slow lane
U.S. vehicle sales in November by top automakers and percentage change from a year earlier
*--* Maker Sales Change from 11/04 GM 274,686 -7.6% Ford 185,852 -14.7% Toyota 169,665 +10.0% Chrysler* 159,898 -2.7% Honda 105,860 +10.8% Nissan 77,212 -3.9% Hyundai 33,383 +12.5%
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*Excludes the Mercedes-Benz and Maybach lines
Source: Autodata
