GM, Ford Are Hit Hardest as Auto Sales Decelerate
Led by double-digit declines at General Motors Corp. and Ford Motor Co., U.S. auto sales fell sharply in October, hurt by soaring gasoline prices, hurricanes and end-of-summer discount programs.
GM, the world’s biggest automaker, reported a 25.6% drop compared with October 2004, according to figures released Tuesday. Sales at Ford fell 26.1%, while DaimlerChrysler had a slight decline. Honda Motor Co. and Toyota Motor Corp. posted small gains.
Overall, sales in the U.S. of light vehicles fell 14.1% during the month, which Paul Ballew, GM’s executive director of market and industry analysis, said was the industry’s worst since 1998.
Sales of SUVs especially “have been taking it on the chin,” said Joe Phillippi of AutoTrends Consulting. “That phenomenon has pretty much run its course. They powered the industry for close to 10 years.”
The domestic market share of the Big Three U.S. automakers slipped to 52.4% from 56.8% a year ago. Much of that loss went to Asian cars, whose share of the U.S. market rose to 40% in October from 35.9% a year ago, despite lower sales by South Korean companies Hyundai Motor Co. and Kia Motors Corp.
No one had been expecting good news, but sales at GM and Ford were even worse than projected. Gasoline prices and the hurricanes were listed as major contributing factors, but industry analysts said the biggest reason for poor sales was that motorists who might have waited until last month to buy had instead been lured to dealerships during the summer by the big discounts offered by the American automakers.
The domestic manufacturers have been trying to wean the car-buying public off those discounts, but that effort has been shaken by October’s dismal sales figures. DaimlerChrysler said Tuesday that it would add a $1,000 incentive to existing programs. GM said that it had nothing to announce but that it would remain competitive.
“Detroit will slap on big incentives, and we’ll be back to normal,” said analyst David Healy of Burnham Securities Inc., who worries that incentives will continue to hurt Detroit’s profits.
Even if overall sales perk up by year’s end, the October results bode ill for the U.S. companies that derive much of their profit from trucks. Sales in the light-truck category, which includes SUVs, pickups and minivans, fell 22.1% in October, according to research firm Autodata Corp.
Ford said sales of its Navigator, Explorer and Expedition SUVs all dropped by more than half from the previous October.
Although gas prices have been ticking down in recent weeks, pump prices are still more than 20% higher than a year ago.
While acknowledging the falloff in demand for big SUVs, GM spokeswoman Deborah Silverman said that year-to-date sales of full-size pickups were still 4% ahead of last year and that sales of luxury makes also were strong.
Fuel-efficient hybrids, meanwhile, continued to show solid gains. Sales of hybrid vehicles at Toyota more than doubled in October to nearly 14,000 -- more than the number posted by the company’s Lexus cars.
“There was a time when having a big, giant engine was sort of in,” said Toyota Motor Sales USA President Jim Press. Now, “everything is sort of pointing to the fact that if you want a good image, it’s better to be efficient.”
Moody’s Investors Service cited GM’s sliding market share as one of the reasons it cut the rating on the auto giant’s debt by two notches, pushing it deeper into junk -- or below-investment-grade -- territory.
GM also has lost money for four straight quarters, including $1.6 billion of red ink in the third quarter. David Cole, director of the Center for Automotive Research in Ann Arbor, Mich., said GM and the other U.S. automakers hadn’t finished wrestling with their costs, which average more than $2,000 per vehicle above those of their competitors.
Shares of GM fell 21 cents to $27.19, Ford slipped a dime to $8.22 and DaimlerChrysler lost 65 cents to $49.40.
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October slowdown
Monthly vehicle sales in the U.S. by company and percentage change from a year earlier.
*--* Company Vehicles sold Percentage change General Motors 252,207 -25.6% Ford Motor 184,493 -26.1 Toyota Motor 173,086 +1.3 DaimlerChrysler 164,814 -3.1 Honda 110,895 +0.4 Nissan 72,279 -16.5 Hyundai 29,413 -11.2 BMW 22,432 -0.8 Kia Motors 20,631 -10.2 Mazda Motor 19,505 -8.3
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Source: AutoData
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Associated Press was used in compiling this report.
