Automakers hit more bumps in the road last month as US sales fell precipitously and manufacturers failed to adapt to a shift in demand to more fuel-efficient cars, company reports showed on Tuesday.
Overall sales totaled 1.189 million vehicles or a seasonally adjusted annual rate of 13.64 million, down 13 percent year-on-year, market research firm Autodata said.
“The US$4 [per gallon] gasoline, the recession in housing and a collapse in consumer confidence has kept people sitting on their hands,” said David Healy, analyst at Burnham Securities.
“It’s the worst possible situation for the industry, because not only are sales slow but you have a mix problem where the profitable vehicles like the SUVs [sport-utility vehicles] are hard to give away and they can’t build enough of the small fuel-efficient vehicles,” he said.
With fuel prices soaring and consumer confidence weak, Healy said “it’ll probably be 2010 before any of the Detroit companies will be profitable again.”
General Motors, the largest US automaker, said its US sales fell 18.5 percent last month to 265,937, holding off a challenge from Japanese Toyota in the domestic market.
Adjusted for selling days, the decline was 8.3 percent, GM said.
But it cited “the limited availability of some of GM’s most popular models,” while demand for big trucks and SUVs floundered.
“We’re doing all we can to meet customer demand for our popular crossovers and cars, including increasing overtime or adding Saturday shifts” at key plants, said Mark LaNeve, vice president at GM North America.
Toyota meanwhile saw a 21.4 percent drop in US sales or 11.5 percent adjusted for the lower number of sales days last month.
The manufacturer, which up to now had been seen as the best adapted to the environment, was caught short on inventory of the hybrid Prius, sales of which fell 25.5 percent from a year ago.
“The Toyota number was lower than we anticipated and GM was a little higher,” Jesse Toprak of Edmunds.com said. “It seems Toyota did not have enough inventory of their smaller, fuel efficient vehicles.”
Robert Brusca at FAO Economics said automakers were hurt by the “wrong mix” of cars.
“Changing the mix is very difficult,” he said. “If you do it too hastily you run the risk of creating a bad car.”
Chrysler showed the worst declines among the top automakers, reporting a 36 percent slide in US sales from a year ago to 117,457.
“The June results reflect the industry-wide impact of US consumer confidence being at its lowest point since 1992,” said Jim Press, president and vice chairman of the number three US auto manufacturer.
“But Chrysler is fighting back and making progress by continuing to invest in our products and aligning our volume with the market,” he said.
Chrysler, highly dependent on trucks and SUVs, extended its incentives to buyers by guaranteeing gasoline at a price of US$2.99 a gallon, below the current market price of around US$4.
Ford Motor Co said its US sales tumbled 28.1 percent to 167,090 units with SUV sales skidding over 50 percent.
“Consumer fundamentals and consumer confidence deteriorated as the first half unfolded,” Ford group vice president Jim Farley said. “The economy enters the second half of the year with a notable absence of momentum and a high degree of uncertainty.”
“Clearly, the rapid rise in gasoline prices and the resulting shift toward fuel efficient vehicles has been challenging, but it also provides an opportunity,” Farley said.
Japan’s Honda was among the few automakers to show a gain, as sales rose 1.1 percent.
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