July 2, 2008

It Was a June Swoon for Automakers

The economic slowdown and the high gasoline prices hit auto- makers hard in June.

Sales fell 27.9 percent at Ford Motor Co., 21.4 percent at Toyota Motor Co. and 18.2 percent at General Motors Corp. in June, the worst month yet in a miserable year for the automobile industry.

Despite the sales drop, GM beat Toyota in June to retain its traditional U.S. sales lead. The nation's biggest automaker on Tuesday reported selling 262,329 vehicles for the month, compared with Toyota's 193,234. Some industry analysts had expected Toyota to beat GM in the United States for the first time, but both companies were hurt by poor sales of trucks and sport utility vehicles.

Nissan Motor Co. also reported a bad month, with sales off 17.8 percent. The Japanese auto-maker saw truck sales plunge 36.1 percent and car sales fall 7.4 percent. And Chrysler LLC took a huge hit, with sales down nearly 36 percent.

Sales at Honda Motor Co. and Volkswagen rose about 1 percent. Those two automakers are less dependent on pickup and SUVs.

Through the first half of 2008, sales were off 14 percent at Ford and 6.8 percent at Toyota.

Sales of pickups and SUVs have been hit particularly hard as consumers seek more fuel-efficient alternatives. Ford said light- truck sales were down 36 percent in June and 18 percent so far this year.

George Pipas, Ford's top sales analyst, said SUV sales are probably down for good. "Our view is that gas prices aren't likely to go down, and more importantly, many consumers have moved on," he said. "We believe that the segment has merit for certain consumers but is not likely to rebound at any point."

At Toyota, car sales dropped 9.4 percent for the month and truck sales slipped 38.9 percent.

Record-high gasoline prices, a housing slump and weak consumer confidence have led to a dramatic decline in sales of many vehicles, particularly the largest and most profitable ones for domestic automakers. The Ford F-series pickup, which has been the best- selling vehicle in the United States for 26 years, was outsold for the second straight month by four cars: Toyota's Corolla and Camry and Honda's Civic and Accord.

Ford recently said it would delay introducing its new F-150 pickup by two months so dealers could have more time to sell off the current version first.

The automakers increased discounts on many slower-selling models last month. GM offered six-year, no-interest loans during the final week of June on most trucks and some cars, and some automakers have been discounting large SUV prices by more than $9,000.

The three Detroit automakers have each said recently that they would significantly cut production of trucks and build more passenger cars in response to the shift in consumers' preferences.

Ford says it will build 25 percent fewer vehicles in the third quarter than it did a year earlier and that it now expects to lose money in 2009. .