US Auto Sales Near 10 Million; Executives Keep Eye On Creeping Gas Prices
03 June 2009 - 5:06PM
Dow Jones News
U.S. auto sales edged toward the 10 million mark in May, lifting
car maker hopes that the industry has finally reached bottomed.
The annualized selling rate came in at 9.91 million new cars and
trucks for the month of May, jumping from April's level of 9.3
million, according to Autodata Corp.
The increase, coupled with some economic recovery signs in
different regions in the world, prompted General Motors Corp. (GM)
executives to say that the industry appears to be "emerging from
the global downturn."
"We are starting to see both globally and in the United States
that the industry is starting to turn for the positive," Ford's
director of Global Market and Industry Analysis Mike
DiGiovanni.
Ford Motor Co. (F) and Chrysler executives were more cautious
about the uptick, noting an end-of-month promotion from GM and an
influx of sales from Chrysler dealers who are expected to be
dropped by the company later this month.
"I wouldn't go that far as to calling bottom," said Chrysler
sales and marketing chief Steve Landry. "There are still a lot of
unknowns out there in the market."
Ford's senior economist Emily Kolinski Morris said that "while
we do anticipate stronger sales in the second half of this year,
the May results should be interpreted with some caution, given the
current volatility in the marketplace."
Still, global industry sales are forecast to have climbed to
63.6 million last month from 60 million in April, according to GM,
signaling that the global slowdown is partially easing.
Countries such as Germany and Korea are offering incentives to
scrap older vehicles, but U.S. lawmakers have failed to pass
similar measures. The government is considering a cash-for-clunkers
program which would give consumers cash vouchers for turning in
their old cars.
GM, Ford Gain Market Share
In the U.S., GM and Ford both gained market share during May at
the expense of Japanese rivals.
Ford reported a 24.1% year-on-year decline, with GM down 28.7%
and fifth-ranked Chrysler off 46.9%, according to Autodata. Toyota
Motor Corp. (TM) slipped 40.7% and fourth-ranked Honda Motor Co.
Ltd (HM) was down 41.5%. Nissan Motor Co. (NSANY) rounded off the
top six with a 33.1% decline.
Chrysler and GM executives said they didn't feel the bankruptcy
filings had resulted in a direct loss of sales. Chrysler filed for
bankruptcy April 30, followed by GM on June 1.
Industry analysts, such as Edmunds.com, say just the opposite is
happening as consumers look for deals and some dealers are forced
to slash prices to reduce their inventory.
Executives with all the car companies expressed concern about
the impact of rising gas prices, with the mix of sales expected to
veer more towards cars from trucks over the balance of the
year.
"The one thing that we have to keep our eye on is gas prices,"
GM's DiGiovanni said. "They have increased from $2.10 to $2.32 a
gallon from April to May. They are still down a lot from last year
but these are the highest gas prices since October 2008."
Financing, which had dominated talk of falling sales over the
past nine months, barely received a mention on company calls.
Chrysler said GMAC LLC, which absorbed Chrysler Financial, is now
writing loans for the majority of its dealers.
U.S. auto production is typically weighed towards the first half
of the year, but is expected to reverse in 2009 despite the cuts at
GM and Chrysler.
Toyota, Ford Boost Production
Ford plans to take advantage of the competitors' woes,
announcing Tuesday a 10,000-vehicle increase in second-quarter
production and projecting third-quarter output up some 10% from a
year earlier - Ford's first significant production increase in
almost two years.
Toyota is adding 65,000 vehicles this summer to its planned
production schedule. The company will increase output of its Camry
and Corolla sedans, Tundra and Tacoma trucks, the Sienna mini-van,
and the Rav4 crossover.
GM said it would release third-quarter production rates later
this week. The auto maker also confirmed that it has reached a
tentative deal to sell its Hummer brand to the Chinese company,
Sichuan Tengzhong Heavy Industrial Machinery Co.
-By Doug Cameron, Dow Jones Newswires; (312) 750 4135;
doug.cameron@dowjones.com
(John Kell and Kevin Kingsbury contributed to this article)