General Motors and Ford Motor said on Wednesday that they would cut car and truck production in the fourth quarter by as much as 7 percent because vehicles were piling up unsold in inventory. Each company experienced a sharp drop in sales last month, along with the auto industry as a whole, new figures released on Wednesday show.
According to Ward's AutoInfoBank, the average number of new cars and light-duty trucks sold daily last month fell by 5.6 percent from the same month last year.
Even Toyota Motor, usually the industry's most consistent seller, suffered a slump last month, with sales off 2.8 percent overall in the Ward's report. Sales of the market-leading Camry sedan fell by 17 percent, and Toyota's sport-utility models by 17.9 percent.
The Chrysler unit of DaimlerChrysler was a significant exception to the trend, posting a small increase of 1.8 percent in the month, largely on the strength of its popular 300C sedan and the new Dodge Magnum station wagon. Car sales at Chrysler rose 21.9 percent, though truck sales were off sharply.
Industry executives said the calendar was partly to blame for the overall decline, with none of the Labor Day weekend falling in August this year; they also cited the effects of Hurricane Charlie and the difficult comparison with an unusually good August last year.
Both GM and Ford cited the uneven economy and expensive gasoline as causes of the slowdown in sales last month, and as reasons for their decisions to cut back production beginning in October.
"Disappointing job gains and higher energy prices are making life difficult for consumers," said Jarlath Costello, an economist at Ford, in a telephone conference call with reporters and analysts.
But Diane Swonk, chief economist at Bank One in Chicago, said she was not persuaded that broader economic issues had much to do with the sales slump.
"Their situation is more one of saturation and excessive incentives earlier that borrowed from their future," she said of the automakers.
GM's over all sales fell 7 percent last month, Ward's said, with truck sales off by 10 percent and sport utility vehicles by 6 percent, compared with a year ago.
GM said it would pare its output in the fourth quarter by 6.8 percent, to 1.29 million vehicles. About three-fifths of that output will be light-duty trucks.
After several months of trying to reduce its inventories, the company still had 1.15 million unsold cars and trucks on hand last month, more than half of them leftover 2004 models. Generous sales incentives will probably be needed to clear them out and make room for the 2005 models now being built.
Ford said it planned to cut its production 7.8 percent in the fourth quarter, to 830,000 vehicles, with nearly all the cuts coming from truck production.
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