June Sales: GM down 12%, Ford down 8%, Imports Gain Again!
07-02-2004, 08:39 PM
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June Sales: GM down 12%, Ford down 8%, Imports Gain Again!
Big Two Tumble, Imports Gain Ground - - By Jack Gilbert - - Source: The Car Connection
General Motors and Ford Motor Co. took two of the biggest hits in June's U.S. sales race. GM sales declined twelve percent, while Ford was off eight percent in comparison with June 2003. Volkswagen was also off significantly, registering a twelve-percent loss during the month. Mitsubishi, embroiled in financial trouble in Japan and an obvious marketing challenge in the U.S. was the market's biggest loser in June, checking in with a 46-percent decline, which drops the automaker's 2004 sales total 27 percent below the first half of 2003.
Still, most Asian automakers were able to maintain sizzling momentum in June. Toyota, Mazda, Honda, Hyundai, Nissan, and Suzuki all managed to register better than five-percent gains, leading the Asian automakers to historically high market-share levels. The Asian makers have gained more than two points in market share and currently are currently up 8.4 percent in sales.
The Toyota Prius and Mazda3 were notable Japanese winners in June, while the Kia Rio and Hyundai Sonata lifted Korean sales.
Overall, the U.S. market was off two percent, while the seasonably adjusted sales rate plummeted to below 16 million units from near 18 million last month. Ford's George Pipas calls the SAAR drop a slight surprise, but says the automaker pretty much expected a down industry in June and predicts a pretty cold summer in terms of sales. GM's Paul Ballew says in a conference call that GM's disappointing performance in a down market indicates the company "has a tough road ahead of us with regard to market share."
GM and Ford both had a difficult month selling trucks and that does not bode well for the top two American automakers, both of which rely heavily on trucks both for profitable vehicle sales and market share performance. Both automakers are looking to lay off incentives this summer, but neither seems to have the kind of standalone depth in their product lineups to support the sort of large volumes Detroit's Big Two have become accustomed to, many analysts were quoted saying Thursday.
Despite the down month for most of Detroit, U.S. vehicle sales are up 2.2 percent during the first half of the year vs. 2003. Chrysler managed to squeak by June with a one-percent gain in sales and remains about five percent better than last year in terms of sales. Chrysler Group Senior Vice President of Sales Gary Dilts credits new products, such as the 300C, and the strength of the Jeep brand for Chrysler's performance.
Chrysler's partner, Mercedes, was able to manage a positive month despite its down year, but it had to sit and watch BMW turn in a record month thanks to SUV sales. BMW light truck sales were up more than 110 percent. Porsche, which has been relying heavily of late on SUVs, actually saw its SUV sales down slightly from 2003. Nevertheless, the German sports car maker was able to rely on its roots, posting strong 911 sales on the way to an 18-percent overall sales gain during the month of June.
General Motors and Ford Motor Co. took two of the biggest hits in June's U.S. sales race. GM sales declined twelve percent, while Ford was off eight percent in comparison with June 2003. Volkswagen was also off significantly, registering a twelve-percent loss during the month. Mitsubishi, embroiled in financial trouble in Japan and an obvious marketing challenge in the U.S. was the market's biggest loser in June, checking in with a 46-percent decline, which drops the automaker's 2004 sales total 27 percent below the first half of 2003.
Still, most Asian automakers were able to maintain sizzling momentum in June. Toyota, Mazda, Honda, Hyundai, Nissan, and Suzuki all managed to register better than five-percent gains, leading the Asian automakers to historically high market-share levels. The Asian makers have gained more than two points in market share and currently are currently up 8.4 percent in sales.
The Toyota Prius and Mazda3 were notable Japanese winners in June, while the Kia Rio and Hyundai Sonata lifted Korean sales.
Overall, the U.S. market was off two percent, while the seasonably adjusted sales rate plummeted to below 16 million units from near 18 million last month. Ford's George Pipas calls the SAAR drop a slight surprise, but says the automaker pretty much expected a down industry in June and predicts a pretty cold summer in terms of sales. GM's Paul Ballew says in a conference call that GM's disappointing performance in a down market indicates the company "has a tough road ahead of us with regard to market share."
GM and Ford both had a difficult month selling trucks and that does not bode well for the top two American automakers, both of which rely heavily on trucks both for profitable vehicle sales and market share performance. Both automakers are looking to lay off incentives this summer, but neither seems to have the kind of standalone depth in their product lineups to support the sort of large volumes Detroit's Big Two have become accustomed to, many analysts were quoted saying Thursday.
Despite the down month for most of Detroit, U.S. vehicle sales are up 2.2 percent during the first half of the year vs. 2003. Chrysler managed to squeak by June with a one-percent gain in sales and remains about five percent better than last year in terms of sales. Chrysler Group Senior Vice President of Sales Gary Dilts credits new products, such as the 300C, and the strength of the Jeep brand for Chrysler's performance.
Chrysler's partner, Mercedes, was able to manage a positive month despite its down year, but it had to sit and watch BMW turn in a record month thanks to SUV sales. BMW light truck sales were up more than 110 percent. Porsche, which has been relying heavily of late on SUVs, actually saw its SUV sales down slightly from 2003. Nevertheless, the German sports car maker was able to rely on its roots, posting strong 911 sales on the way to an 18-percent overall sales gain during the month of June.
07-02-2004, 08:40 PM
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I am blown away by these numbers and I am tired of reading the same story: "Detroit down, imports up". What will it take for the American automaker to start taking this industry seriously?
07-02-2004, 08:41 PM
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Pressure mounts on Ford, GM after weak U.S. sales - - Reuters / July 02, 2004 - - Source: Autonews
DETROIT -- Double-digit drops in U.S. auto sales at General Motors and Ford Motor Co. in June pressures them to raise profit-eroding incentives to "ballistic" levels and could also spur costly production cuts, analysts said on Friday.
The fall in sales by Detroit's two largest automakers pushed industrywide U.S. auto sales to a nearly six-year low and added to evidence that the economy may not have been as robust as thought in the second quarter, industry analysts said.
"With (vehicle) inventory at critical levels, aggressive incentive spending will likely be necessary to maintain planned production schedules," Goldman Sachs analyst Gary Lapidus said in a research note. The automakers "would likely implement ballistic incentives before cutting 2004 production," he said.
The traditional two-week summer shutdown of Big 3 plants in North America will help trim inventories, which are about 25 percent to 30 percent above ideal levels, analysts said.
Ford will likely have to cut production next year, Lapidus said, but other analysts said both GM and Ford may have to cut production sooner, in the third or fourth quarter.
Production cuts have an immediate impact on automakers' profits because they book them when vehicles are shipped from factories rather than sold to consumers.
The Chrysler group posted a 1 percent gain in June sales, thanks to strong sales of its new Chrysler 300 sports sedan, but it also has bloated inventories of unsold vehicles. Any increase in incentives by GM and Ford will also press the Chrysler group to match the offers.
Big 3 production cuts would hurt earnings at suppliers also, said UBS analyst Rob Hinchliffe. "The risk at this point is maybe the suppliers don't make their numbers for the full year," he said.
GM has been offering incentives averaging about $4,325 per vehicle, which includes interest-free loans for terms of up to 5 years on many of its 2004 models, according to Autodata, which tracks industry incentives.
SLOWER GROWTH
Ford has been offering substantially lower incentives than GM, an average of $3,515 according to Autodata. But Ford will have to narrow the incentive gap with GM as it ramps up production of its top-selling F-Series pickup truck, said Lloyd Hansen, Ford's vice president in charge of incentives and marketing.
"We have a lot more of them (pickups) to sell ... so we will become more competitive on incentives," Hansen said.
The sudden drop in car sales added to evidence that spending by U.S. consumers slowed in June. The two largest U.S. retailers, Wal-Mart Stores Inc. and Target Corp., warned of weaker-then-expected stores sales for June, but blamed the shortfall on cooler weather.
"We're looking for a slightly weaker second quarter than we previously had," said Bank One Senior Economist Peter Glassman. "It sort of pushed that growth that we expected toward the second half of the year."
Other automakers, including Japan's Mitsubishi Motors Corp., Volkswagen AG, and Ford's Jaguar and Land Rover brands, were also hit by the sudden downturn in June sales. Mitsubishi, which suffered a 48 percent drop in June sales and has been hit by a scandal in Japan over recalled cars there, offered a longer warranty on its vehicles sold in the United States. Mitsubishi will also offer free routine maintenance, such as oil and filter changes and tire rotation, for three years for cars and SUVs sold over the next two months.
With interest rates on the rise, analysts expect more of Mitsubishi's type of unique incentive offers as a means of backing away from interest-free loans.
DETROIT -- Double-digit drops in U.S. auto sales at General Motors and Ford Motor Co. in June pressures them to raise profit-eroding incentives to "ballistic" levels and could also spur costly production cuts, analysts said on Friday.
The fall in sales by Detroit's two largest automakers pushed industrywide U.S. auto sales to a nearly six-year low and added to evidence that the economy may not have been as robust as thought in the second quarter, industry analysts said.
"With (vehicle) inventory at critical levels, aggressive incentive spending will likely be necessary to maintain planned production schedules," Goldman Sachs analyst Gary Lapidus said in a research note. The automakers "would likely implement ballistic incentives before cutting 2004 production," he said.
The traditional two-week summer shutdown of Big 3 plants in North America will help trim inventories, which are about 25 percent to 30 percent above ideal levels, analysts said.
Ford will likely have to cut production next year, Lapidus said, but other analysts said both GM and Ford may have to cut production sooner, in the third or fourth quarter.
Production cuts have an immediate impact on automakers' profits because they book them when vehicles are shipped from factories rather than sold to consumers.
The Chrysler group posted a 1 percent gain in June sales, thanks to strong sales of its new Chrysler 300 sports sedan, but it also has bloated inventories of unsold vehicles. Any increase in incentives by GM and Ford will also press the Chrysler group to match the offers.
Big 3 production cuts would hurt earnings at suppliers also, said UBS analyst Rob Hinchliffe. "The risk at this point is maybe the suppliers don't make their numbers for the full year," he said.
GM has been offering incentives averaging about $4,325 per vehicle, which includes interest-free loans for terms of up to 5 years on many of its 2004 models, according to Autodata, which tracks industry incentives.
SLOWER GROWTH
Ford has been offering substantially lower incentives than GM, an average of $3,515 according to Autodata. But Ford will have to narrow the incentive gap with GM as it ramps up production of its top-selling F-Series pickup truck, said Lloyd Hansen, Ford's vice president in charge of incentives and marketing.
"We have a lot more of them (pickups) to sell ... so we will become more competitive on incentives," Hansen said.
The sudden drop in car sales added to evidence that spending by U.S. consumers slowed in June. The two largest U.S. retailers, Wal-Mart Stores Inc. and Target Corp., warned of weaker-then-expected stores sales for June, but blamed the shortfall on cooler weather.
"We're looking for a slightly weaker second quarter than we previously had," said Bank One Senior Economist Peter Glassman. "It sort of pushed that growth that we expected toward the second half of the year."
Other automakers, including Japan's Mitsubishi Motors Corp., Volkswagen AG, and Ford's Jaguar and Land Rover brands, were also hit by the sudden downturn in June sales. Mitsubishi, which suffered a 48 percent drop in June sales and has been hit by a scandal in Japan over recalled cars there, offered a longer warranty on its vehicles sold in the United States. Mitsubishi will also offer free routine maintenance, such as oil and filter changes and tire rotation, for three years for cars and SUVs sold over the next two months.
With interest rates on the rise, analysts expect more of Mitsubishi's type of unique incentive offers as a means of backing away from interest-free loans.
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