GM, Ford on a roll in October
Fueled by falling gasoline prices and hefty incentives on full-size pickup trucks and sport utility vehicles, U.S. auto sales in October rose 6% from a year earlier.
The increase was led, for a change, by improved performance at General Motors Corp., up 16.8%. Rival Ford Motor Co. recorded an 8.8% gain.
Among the Asian-based manufacturers, perennial sales gain leader Toyota Motor Corp. posted a 9.2% increase and Nissan Motor Co., which has had a string of sales declines this year, reported a 3.9% gain.
Still, the numbers masked potentially troubling trends, in particular for the Michigan-based Big Three.
Automakers benefited from favorable comparisons with results from October 2005, when sales plummeted after a wild summer stoked by employee discount pricing programs and other incentives. Industrywide sales last month remained well below the levels of October 2004.
Two major auto dealership chains, AutoNation Inc. and Group 1 Automotive Inc., added to the domestic industry’s woes this week by announcing plans to cut their orders from GM, Ford and Chrysler Group in coming months. They cited those automakers’ declining sales -- all three are down year to date despite October’s gains -- and growing demand for vehicles built by overseas-based rivals.
But worries that had been building over soaring inventories of hulking pickups and SUVs also were eased somewhat by the month’s sales increases and the successes that GM and Ford reported in trimming unsold stock by slashing production.
Ford, which recently ordered a 25% cut in fourth-quarter output from its North American factories, said Monday that it anticipated further cuts of 8% to 12% in the first half of 2007.
“Its not a big turnaround for all -- Chrysler is still sliding -- but compared to a few years ago, when Detroit made the cars it wanted to and just expected people to come buy them, things are looking up,” said analyst Jesse Toprak of Edmunds.com, an online automotive information provider based in Santa Monica.
“Things aren’t solved, but they’re handling them better,” he said of the Big Three. “They have started making the kind of cars people want and are matching production to consumer demand. That’s the way Toyota became so successful.”
Among the six largest automakers in the U.S. market, only Chrysler Group posted a measurable October sales decline, off 3.2%, as sales of its aging minivans, big SUVs and large cars such as the Chrysler 300 and Dodge Magnum fell.
Honda Motor Co. of Japan reported an uncharacteristic drop in sales but was off only 0.2% for the month. Toprak said the decline was caused by a shortage of Civic compacts and mid-size Accord sedans with fuel-efficient four-cylinder engines -- the types of vehicles that customers demanded during this year’s run-up in gasoline prices.
The month’s big gainers overcame fuel concerns, scoring with vehicles that offer decidedly lower fuel economy, especially as gas prices started to ease from their record highs.
GM earned its industry-leading gain on the strength of its truck and SUV offerings, and Ford rose with sales of its F-150 pickup and its new mid-size cars all doing well. Even Toyota, one of the small-car leaders, cited strong performances by its redesigned RAV4 small crossover SUV and its Tundra pickup.
The trucks all were backed, though, by sizable incentives, including discounted prices, cash rebates and lower-than-market interest rates.
Ford led the industry with $7,792 in incentives on its Ford Expedition, according to data compiled by Edmunds. GM’s Hummer H2 carried an average of $6,949 in incentives during the month and Chrysler Group’s Dodge slapped $6,954 of incentives on its Durango SUVs.
Even Asian automakers stepped things up to move their trucks. Toyota placed an average of $5,602 in incentives on its full-size Tundra pickup -- more than $1,000 above Ford’s spending on its F-150s. Nissan’s Infiniti QX56 luxury SUV carried an average of $5,455 in incentives during October, Edmunds reported.
GM, Ford and Chrysler have been hurt as customer tastes shift to smaller, more fuelefficient vehicles, said Frank Khoshnoud, a principal with Capgemini’s Detroit-based automotive consulting practice.
The industrywide average dealer inventory in October was 69 days, about nine more than normal, Toprak of Edmunds said. Toyota dealers averaged 26 days’ inventory; Chrysler dealers were jammed with an average of 109 days’ inventory of cars and trucks. “We’re closer to 105 days right now” at his company’s Chrysler Group franchises, said Glenn Moss, chief executive and president of Moss Bros. Automotive Group in Riverside.
The chain owns two stand-alone Dodge dealerships and a Chrysler-Jeep-Dodge complex, as well as individual Honda, Toyota and Hyundai stores. “We like to keep it to 60 days’ supply on the ground and 30 days’ supply on order,” Moss said.
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October sales
*--* Sales % change YTD (In thousands from market of units) Oct. ’05 share GM 294.7 +16.8% 24.5% Ford 200.8 +8.8 16.8 Toyota 189.0 +9.2 15.2 Chrysler 159.6 -3.2 12.8 Honda 110.6 -0.2 9.1 Nissan 75.1 +3.9 6.1 Hyundai 30.5 +3.6 2.8 BMW 20.8 -7.2 1.6 Mercedes 20.6 +12.2 1.4 Kia 20.1 -2.6 1.7
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Source: Autodata
