GM, Ford sales seen down in March as trucks falter
Automotive News / March 30, 2007 - 9:52 am /
UPDATED: 3/30/2007 4:17
DETROIT (Reuters) -- U.S. sales for General Motors and Ford Motor Co.
were stuck in the slow lane in March as a weakening housing market
dampened pickup sales, even as Japanese rival Toyota Motor Corp. raced
ahead, analysts said.
Toyota and other Asian automakers have been relentlessly stealing U.S.
market share from Ford and GM on the strength of their sedans and
The slowdown in the U.S. housing market prompted many contractors, who
typically buy pickups, to delay purchases, hurting U.S. automakers,
"Modest headwinds for the month could be a deterioration of consumer
confidence and continued housing weakness," Bear Stearns analyst Peter
Nesvold said in a research note.
Another area of concern for automakers is the implosion in the
subprime lending market, which analysts say has caused banks to
rethink their lending practices, not just for mortgages but autos as
"Interest rates on new car loans in January rose to 6.45 percent, a
rate not seen in seven years," according to IRN Inc., which tracks the
But Nesvold said despite the housing weakness and subprime mortgage
fears, the economy remains strong enough to support sales in the low-
to mid-16 million-unit range this year.
New U.S. vehicle sales are expected to come in at a seasonally
adjusted annual rate of between 16.2 million and 16.6 million vehicles
for March, according to analysts.
That would be slightly down to flat compared with last March's 16.6
Automakers will release March sales results on Tuesday, April 3.
Most analysts expected GM's sales to be down between 3 percent and 5
percent in March, while Ford sales were forecast to fall by as much as
Ford's chief sales analyst George Pipas told Reuters that sales likely
fell by a double-digit-percentage range, hurt by lower sales of its
best-selling F-series pickup.
"I can say with some confidence that we'll be down in the double
digits," Pipas said. "It's about comparison. The F series did much
better last year."
Sales for the Chrysler group are expected to be down between 5 percent
and 7 percent.
Toyota, on the other hand, is expected to post a sales increase of up
to 9 percent.
"Sales of passenger cars seem to continue to be very strong,
particularly the new Toyota Camry, the Yaris, as well as the Lexus LS
and ES," Lehman Brothers analyst Brian Johnson said in a note to
Toyota just added a $1,000 trade-in incentive nationwide on its new
Tundra pickup truck, which is competing against GM's new Chevrolet
Silverado and Ford's popular F series.
"We view this move as a negative development for the category,"
Johnson said, adding that Toyota's move could lead to a price war in
the hypercompetitive pickup segment.
A price war could be damaging for Ford's and Chrysler's profitability,
and could hurt GM as "its 2007 turnaround depends greatly on increased
contribution margins from its new pickups," Johnson said.
GM, Ford and Chrysler are all losing money, cutting jobs and reducing
production. All three are in the midst of executing a restructuring
plan to return their North American operations to profit.
Also, potential bidders have begun to size up Chrysler for a potential
acquisition after Daimler said in February it was leaving all options
open for the unit.