GM Sales Fall 25% as Unemployment Wards Off Consumers

GM Sales Fall 25% as Unemployment Wards Off Consumers http://tinyurl.com/3xettya
General Motors Co. and Ford Motor Co. reported sales declines that
exceeded analysts’ expectations as the U.S. auto industry headed for its worst August in 28 years. Chrysler Group LLC deliveries rose more than expected.
GM said deliveries fell 25 percent to 185,176 from 246,479 last August, when the U.S. government’s “cash for clunkers” incentive program boosted sales. The largest U.S. automaker was expected to report a 19 percent decrease, including an adjustment for the number of selling days in August, the average estimate of four analysts surveyed by Bloomberg. On that basis, sales fell 22 percent, Detroit-based GM said in a statement.
U.S. auto sales last month probably were the slowest for August in 28 years as model-year closeout deals failed to entice consumers concerned about the economy and their jobs. Deliveries industrywide may have reached an annualized rate of 11.6 million vehicles last month, the average of eight analysts’ estimates compiled by Bloomberg. That would be 18 percent below last year’s 14.2 million pace and above July’s 11.5 million rate.
“The car market and the overall economy is pretty weak,” Joe Phillippi, principal of consulting firm AutoTrends in Short Hills, New Jersey, said today by telephone. “Showroom traffic is down. We still have issues on the margin with some people not being able to get credit and people are nervous.”
Ford sales fell 11 percent to 157,503 from 176,323 a year earlier for the Dearborn, Michigan-based automaker’s three main brands. On a daily selling rate basis, sales declined 7.1 percent, more than the expected 5.2 percent decline, the average of six analysts’ estimates. Including August 2009 sales by Volvo, which Ford sold for $1.5 billion last month to Zhejiang Geely Holding Co., sales fell 13 percent.
Ford Breakdown
Ford said its car sales fell 14 percent and deliveries of sport-utility vehicles declined 26 percent, while pickup sales rose 5 percent in August. Sales of the Focus small car fell 40 percent, while the Escape small SUV dropped 29 percent. Those two models were strong sellers in last year’s “cash for clunkers” program, Ford said.
Chrysler sales rose 7 percent to 99,611 compared to last August, the company said. It’s the Auburn Hills, Michigan-based automaker’s fifth-straight month of year-over-year sales increases. On an adjusted basis, Chrysler rose 11 percent, exceeding the 3 percent average of six analysts’ estimates.
“Chrysler Group is proud that we have beaten or matched the average industry sales increase for the fifth consecutive month this year and for the calendar year to date,” Fred Diaz, Chrysler’s lead executive for U.S. sales, said in a statement. “This is proof positive that we are accomplishing our goals -- steady, sustainable growth.”
Sales of the Jeep, Dodge and Ram vehicles increased last month, while Chrysler brand sales slipped 4 percent.
Chevy Down
Sales of GM’s volume brand, Chevrolet, sales fell 22 percent, as Camaro sports-car deliveries tumbled 27 percent and Traverse sport-utility vehicle sales plunged 32 percent.
Its other three U.S. brands showed better results than they did last year. Cadillac gained 83 percent, Buick increased 66 percent and GMC gained 12 percent. The automaker closed or sold four brands since its bankruptcy last year.
GM executives expect a slow recovery in the economy and in auto sales, said Don Johnson, GM vice president of U.S. sales operations. He said sales rates will pick up only modestly through the end of the year. He said that GM will not respond to the slow recovery with incentive deals.
‘Bumpy’ Road
“We know it’s going to continue to be bumpy,” Johnson said on a conference call today. “We’re not panicking. We don’t want to get back to putting incentives into the marketplace to keep plants going.”
GM had 16.5 percent of the U.S. retail market in August, Johnson said. The company’s total share has been running close to 20 percent this year, reflecting gains from fleet sales. Johnson said he expects GM’s retail share to rise in the second half as the company begins selling new models like the compact Chevrolet Cruze, Buick Regal sedan and redesigned heavy-duty versions of its large pickups.
“We definitely are forecasting our share of the retail market to rise,” Johnson said.
Dan Akerson replaces Ed Whitacre as the company’s chief executive officer today. Akerson, who will become chairman by year-end, is GM’s fourth CEO in 18 months.
While automakers increased discounts by 1 percent from July to an average $2,864 per vehicle, sales to individuals probably fell 7 percent in August from the previous month, according to researcher TrueCar.com, based in Santa Monica, California.
Unemployment, Confidence
Consumers are avoiding showrooms as fear of a double-dip recession grows following the 27 percent plunge in existing home sales in July, said Jesse Toprak, vice president of industry trends at TrueCar.com. The U.S. unemployment rate in July held at 9.5 percent, near a 26-year high of 10.1 percent. The Conference Board reported yesterday that consumer sentiment rose to 53.5 last month from a five-month low of 51 in July. Fewer Americans said jobs were plentiful in August.
“Home sales are way down, the stock market is way down, the unemployment report is very disappointing and consumer confidence is sputtering,” Toprak said. “People just don’t want to make big-ticket purchases because they’re uncertain about their jobs and the value of their homes.”
Industrywide sales to rental-car companies, business and government, also known as fleet sales, will account for 20 percent of August deliveries, up from 15 percent in July, Credit Suisse Group AG auto analyst Chris Ceraso wrote in an Aug. 26 report.
Fleet Boost
Fleet sales, especially to rental-car companies, have helped prop up the market as individual customers stay away, said Sophia Koropeckyj, managing director of Moody’s Analytics.
“Consumers are still under a considerable amount of strain and they do not have much appetite or ability to purchase new vehicles,” said Koropeckyj, who is based in West Chester, Pennsylvania.
Compared with a year earlier, GM reduced its incentives and sold vehicles for an average of $5,600 more, Johnson said.
That doesn’t match with TrueCar’s analysis, which found that GM increased sales discounts 18 percent to $3,763 per vehicle in August, and Ford boosted discounts by 25 percent to $3,008 per vehicle.
Sales by Japanese automakers, which benefited most from the “cash for clunkers” program, were expected to fall more than the overall market, analysts said.
Toyota Motor Corp.’s U.S. deliveries may drop 29 percent and Honda Motor Co. may decline 27 percent, the average of four analysts’ estimates. Nissan Motor Co.’s sales may slide 24 percent, the average of four estimates.
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It is obviously a doom and gloom over the market for old type of cars.
People are starting to wait for the electric revolution.
At least get a hybrid and the problem is that the production capacity for the electrics is only just beginning to emerge.
The waiting list and the people are on the fences and waiting to see what will happen.
http://www.mynissanleaf.com/index.php
Here is one of those windows into the future.
People keep their hands and their money in their pockets.
Who is going to buy an old type of car when you can get on the bandwagon for the car of the future.
The old type of car has reached its maximum in numbers and it is only downhill from here on.
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On 9/2/2010 2:01 AM, Bjorn wrote:

Ir simply with job losses, lower pay, less commissions, uncertainty of the job you have or keeping the home is more important than a second depreciating car.
Even know someone who moved so they didn't need a full time car.
Less consumption and wiser use of autos is going mean less autos are required. And while GM shifted much of its debt to the taxpayer, the taxpayer futures are that they have less to spend on the autos. GM kind of helped screw their customers.
Bet GM gets another corruption bailout by spring. Or perhaps as a sweetener for someone to buy the turkey.
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OK, you need to be fair to GM (and Ford)...
Compard to last August, Toyota division sales dropped by 45%, Honda division by 44%, and Nissan division by 43%. Ford division's 16% decline, and GM's 25% decline don't look so bad when you compare them to the Asian giants do they? Also, both GM and Ford are apparently making money now despite the slower sales.
Ed
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C. E. White wrote:

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