Automakers Predict Sales Decline
Friday, June 2nd, 2006
Slowing sport utility vehicle and truck sales due to high gasoline prices likely will drive down sales for domestic automakers when May results are released Thursday, according to industry analysts.
Some analysts are predicting that General Motors Corp. will be hit hardest because it is trying to wean itself off incentives and fleet sales, and because it relies heavily on truck-based SUVs.
Foreign brands also will be hit by declining SUV and truck sales, but will post strong results nonetheless because consumers are buying smaller, more fuel-efficient cars such as the Honda Fit and Toyota Yaris, analysts said.
David Healy, an analyst with Burnham Investment Research, predicted a drop of up to 15 percent for GM and DaimlerChrysler AG’s Chrysler Group. Ford Motor Co., he said, should see a smaller decline of around 5 percent because it is selling Fusion and Focus models.
“They’re really getting killed in the mid-sized truck-based SUVs,” he said, predicting that the Ford Explorer and Chevrolet TrailBlazer could see 30 to 40 percent sales drops compared to May 2005.
“The sales of those are awful,” he said.
Goldman, Sachs & Co. also predicted slower sales for GM, with a 15 percent year-over-year drop in May. Chrysler, it said, would see a 10 percent decrease, while Ford sales would decline 5.9 percent. Imports would rise 7.6 percent.
In a statement, analyst Robert Barry said GM is pursuing longer-term profit, by trading volume for lower incentives and reduced fleet sales.
But he questioned how long GM can maintain that strategy with nearly $3 per gallon gasoline reducing SUV sales.
GM’s strategy is hurting sales at the dealer level, said Jim Mazzulo, sales manager for Bill Kay Chevrolet in Lisle, Ill.
“They’re almost trying to go to like a one-price thing,” Mazzulo said. “No, it’s not working at all. I think bigger incentives might do it, might get the rock going up the hill.”
Healy said buyers are overemphasizing the impact of gas prices, saying that at $3 per gallon, it costs the average driver $36 more per month than last year at this time.
“Pretty soon, people are going to get used to $3 a gallon and forget about it,” he said. “But it won’t happen for a while.”
Still, he predicted that the trend away from truck-based SUVs would continue no matter what happens to gas prices.
“People realized that these monsters didn’t do anything,” he said.
At Art Moehn Chevrolet-Honda in Jackson, Mich., sales were close to the analysts’ predictions for May, said owner John Kudner.
Tahoes and Suburbans are selling well, but Chevrolet sales overall will be 8 or 9 percent below May 2005, he said. Michigan’s slow economy and the potential for job losses are hurting Honda sales as well, which he said are about flat with May of last year despite hot sales of the Fit and Civic models.
“I think everybody in the state of Michigan is a little nervous about buying a car right now,” he said.
Tags: none
Share This: Email This To A Friend or Social Bookmark It!
If you were interested in Automakers Predict Sales Decline, you may also be interested in:
Used SUV Prices Dropping, Hurting GM and Ford: High gas prices and aggressive new-vehicle incentives are depressing the value of used large sport utility vehicles, potentially hurting the bottom line of General Motors
Toyota Corolla Delayed Till 2008: If the all-new Yaris is too small and cramped for you and the current Corolla is too out of date then you’ll just have to
Diesel Car Production in the US expected to increase.: Diesel cars are everywhere in Europe, but they've never gone mainstream in the United States. After years of squabbling among automakers, oil companies and regulators, technology
