Sales Downshift at Ford, GM

Americans’ passion for sport utility vehicles cooled in the face of $3-a-gallon gasoline last month, helping drag down September sales for General Motors Corp. and Ford Motor Co. as their Asian competitors enjoyed double-digit sales increases, the companies reported Monday.

Sales declines of 24% at GM and 19% at Ford compared with September 2004 were also impelled by popular discount programs that pulled many of this year’s sales into mid-summer.

America’s Big Three automakers offered sales incentives over the summer that promised the same prices provided to company employees. Sales shot up for about two months, but market observers predicted that sales would slide after buyers were sated.

“They exhausted their customers and their inventories in July and August,” auto analyst David Healy of Burnham Securities Inc. said. “This is the hangover from the employee discount pricing.”

“Expect a very weak fourth quarter as well,” said Steven Szakaly, an economist at the Center for Automotive Research in Ann Arbor, Mich.

Perhaps more troubling for manufacturers was cooling interest last month in the gas-devouring SUVs that have been profit stalwarts.

Sales of the GMC Envoy and the Chevrolet Tahoe fell more than 50%. The Cadillac Escalade, the Mazda Tribute, the Ford Explorer, the Ford Expedition, the Toyota Sequoia and the Nissan Armada dropped 18% or more. The Dodge Durango slipped 11%.

New SUV models on the horizon could improve the picture, Healy said, but he predicted a long-term decline in sales of large SUVs.

“People see $100 fill-ups and wonder what the hell they are doing,” Healy said. “Even the rich who can afford it realize that maybe these vehicles don’t do much more than a sensible vehicle could.”

The run-up in gasoline prices, compounded by the recent hurricanes on the Gulf Coast, hurts more than just SUV sales, Szakaly said. Higher fuel costs also cut into families’ disposable incomes, he said. “Consumers are saying they are not going to keep spending at the rate they were before gas prices went up,” he said, adding that some probably would delay buying new cars.

Standard & Poor’s expressed similar concerns about rising gasoline prices and falling auto sales Monday. The credit-rating firm said it was reviewing its debt ratings of GM and Ford for possible downgrading. Lower ratings would make it more expensive for the automakers to borrow money, adding to the financial woes of the country’s two largest auto manufacturers.

GM spokeswoman Deborah Silverman predicted that October would be another month of “payback” for hot summer sales, but the declines would be offset by the 6% rise in sales during the four-month employee discount program that ended Sept. 30. It reduced inventory from 1.2 million vehicles to 800,000, about 300,000 fewer than the company had this time a year ago.

GM will emphasize more transparent pricing in the months ahead, she said, so that buyers who start their shopping on the Internet can more accurately compare costs.

In the past, “when customers went to compare our vehicles on the Web, it would put us at a disadvantage,” she said. “They didn’t really see a transaction price.”

The company is seeing strong sales in several new models, including the Hummer H3, the Pontiac G6, the Cadillac DTS and the Chevrolet Impala and HHR. The HHR is a so-called crossover combination of SUV and passenger vehicle that uses a car chassis instead of a truck chassis. Such vehicles are growing in popularity as buyers shy away from full-size SUVs.

Rising gasoline prices didn’t stop buyers of pickup trucks, though. Sales of DaimlerChrysler’s Dodge Ram were up 5% for its best month ever, and Toyota Motor Corp. saw sales of its Tacoma climb more than 21%.

DaimlerChrysler beat its U.S. rivals with a 4% increase in overall sales, led by a 26% boost in car sales. The Dodge Neon, which Chrysler Group stopped making two weeks ago, saw a 69% increase in sales.

Nissan Motor Co. sales were up more than 16% and Toyota’s climbed 10%, both on increased car sales. Sales of the hybrid Toyota Prius jumped 90%, while Honda Motor Co.’s sales rose 11.7%, largely on consumers’ embrace of the redesigned 2006 Civic.

Hyundai Motor Co.’s sales rose 9%. Volkswagen will report its sales today.

GM shares rose 43 cents to $31.04, Ford climbed 3 cents to $9.89 and DaimlerChrysler was up 44 cents to $53.56.