GM Sales Fall 25% as Unemployment Wards Off Consumers
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
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
“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
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 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
“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.
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.
“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,”
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.
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 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,
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
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