As expected American car sales fell sharply in June: not as much as forecast, but enough to again cause real damage to the market leaders, which this time included significant losses for Toyota for a combination of reasons.
The tax rebate which has helped boost retail sales, industrial production (overnight figures were better than forecast) and consumer spending, hasn’t been spent on cars, judging by the continuing plunge in sales figures.
No wonder there’s gloom and doom in so many parts of the US. Car dealers are the length and breadth of the country and in many cases when they do badly (especially in the Midwest and South), the entire region is doing badly. not even the farm boom in grain growing areas is helping.
And besides cars, the tax rebate money isn’t being spent in coffee shops, with the huge Starbucks chain revealing plans to sack 12,000 employees, close 600 outlets and take a $A400 million charge. It won’t be the last such announcement. We have already seen this happening in cars and airlines, now retailing.
But cars remain the big concern. Every month so far this year has seen sales slide; but the falls have deepened in May and now June. High petrol prices ($US4.09 a gallon on average, and higher in many states) are forcing Americans buyers to shun fuel guzzling pickups and SUVs.
And in a major worry for the industry, sales of many fuel efficient car models, such as Toyota’s Prius hybrid, also fell sharply in the month as the car companies were caught with insufficient stocks of fuel efficient vehicles.
General Motors sales fell 18%, Ford was down 28% while Toyota’s 21% drop was the largest in six years it suffered plunging sales of a its Tundra pickup line and a severe shortage of the Prius. Chrysler sales were off more than 35%.
It announced the close of a minivan plant on Monday and the idling of another for some time to try and cut stocks. Minivans consume petrol like SUVs and pick ups and US buyers are deserting them in their thousands.
General Motors reported that all its US vehicle sales fell 18% in June compared with June 2007. Sales of GM’s light trucks, which includes pickups, SUVs and so-called crossovers, dropped 16%, but worryingly for the stuttering giant, its car sales fell a steep 21%.
The results were better than forecasts of an overall 25% decline in sales and it was enough for GM to hang onto the title of the No. 1 automaker in terms of US sales in front of Toyota.
Toyota’s sales plunge surprised and means the car giant will be downgrading its US and worldwide production later this month. It is already expecting a drop in earnings as a result of the US slowdown.
That now looks to be certain, especially with the British and European car markets sliding as well (But China and India are booming)
Toyota did see a 15.6% jump in sales of its Corolla models, but surprisingly sales fell for the more fuel efficient subcompact Yaris, and the medium sized Camry.
The Camry was Toyota’s best selling US model up to June, so it would seem that the number of buyers looking for more efficient and cheaper cars is now falling.
Prius sales fell by a third, due to tight supplies: Toyota just can’t make enough.
Ford’s 28% decline in sales was driven by a 50%-plus plunge in demand for its SUVs and for pickups and other trucks fall more than a third.
Sales of Ford’s crossovers (truck type cars, or car type trucks) dropped 18% from June 2007.
Sales of Ford cars fell 12% because it didn’t have enough vehicles of the kind the car buyer was wanting.
Only two of Ford’s 20-plus models lifted sales: the Mercury Milan and Ford Fusion sedan.
The worst performer so far reported? GM’s Hummer SUV division lost 59% percent of its June 2007 sales. GM is trying to sell it, at that rate it will be giving it away or closing it down.
Analysts say that some US car dealers are refusing to buy or trade pick ups, SUVs and other fuel guzzlers for fear of being stuck with unwanted stock. Some models are thought to be worthless at the moment (which in turn causes concerns for financiers and insurers).
Honda went again the trend because it produces cars, and models that buyers not only want, but can buy.Its sales rose 1.1%, as did Volkswagen. But even then the increases were weaker than expected by analysts.
Nissan (44% owned by Renault of France) saw sales fall 18%, much worse than the 8% fall forecast in the market.
Other smaller car groups (South Korean, European) release their sales figures in the next few hours and total industry figures will be available tomorrow.
Analysts pointed out that June’s sales were affected by fewer sales days and one less weekend compared to June 2007.
Japanese automakers reported smaller percentage declines in sales than the raw numbers indicated because they based their comparisons on a daily sales rate, rather than absolute sales.
