U.S. auto sales tumbled sharply at four of the nation’s largest automakers in March, although officials with some of the companies said they hope the worst of the downturn is behind them.
The sales at U.S. automakers General Motors and Ford Motor (F, Fortune 500) and Japanese rivals Toyota Motor (TM) and Honda Motor (HMC) all fell at least 36% from year ago levels. But all posted gains from January and February, and all but Toyota topped forecasts from sales tracker Edmunds.com.
Industry executives weren’t ready to declare a definite bottom for auto sales, which plunged to 27-year lows earlier this year. But they said an increase in sales in late March is giving them some hope for the coming months, even as two of the major automakers, GM (GM, Fortune 500) and Chrysler LLC, battle to avoid being forced into bankruptcy.
Mark LaNeve, vice president for GM North America vehicle sales, said sales wound up being better for every major manufacturer than what had been widely expected earlier in the month.
“Maybe we’re starting to…show some signs of life,” he said.
Emily Kolinski Morris, Ford’s senior U.S. economist, said that some recent readings that show a slowing of the nation’s economic decline have the company hopeful that industrywide sales might reach bottom in the next three or four months.
“We think we’re getting close to turning the corner,” she told analysts and journalists on the company’s sales call.
But Ford officials said they aren’t yet banking on any immediate sales rebound, as they keep production of new vehicles in check.
“There’s no point in trying to get ahead of ourselves,” said George Pipas, Ford’s director of sales analysis. He said Ford’s efforts to keep inventories in line with lower demand are “literally almost a day-by-day process.”
There are huge challenges for the industry, first and foremost the bankruptcy clock ticking at GM and Chrysler.
President Obama announced Monday that a government task force overseeing $16.4 billion in loans already given to the two companies had found their turnaround plans not viable.
GM has 60 days to try to reach agreements on deeper cost cuts with its creditors and unions, while Chrysler has only 30 days to work out a deal with Italian automaker Fiat or it could be forced out of business.
Obama vowed to provide government help for GM even if it is forced into bankruptcy, and he announced the government would stand behind warranties at the two companies.
GM officials think that, despite the bankruptcy threat, car buyers were more assured than scared by President Obama’s remarks on Monday. The company said it had a sales bump in the last two days of the month.
The president also endorsed a proposal now in Congress, a so-called “cash for clunkers” program, to provide incentives to people who trade in older gas guzzlers for more fuel efficient cars. Officials with Ford and GM said that could spark sales of 1 million to 1.5 million vehicles later this year, depending on the details.
Still, the sales numbers from each company were a sign of how far demand for vehicles has fallen from year-ago levels, and how far the industry needs to rebound to get back to what are considered normal sales.
Sharp drops from March ’08
GM reported that sales fell 45% from year-ago levels. Its three brands which may be dropped in a restructuring of the company – Saturn, Saab and Hummer – each reported much bigger sales declines than GM’s overall drop, the worst being a 76% plunge in Hummer sales.
Ford reported a 41% drop in sales from a year ago and its declines were broad based. Sales fell more than 30% across all the company’s brands and vehicle types. The biggest drop was a 73% plunge in sales of SUVs.
Toyota Motor reported a 39% drop in sales, while U.S. sales at Honda Motor fell 36%.
Ford estimates that about 800,000 vehicles were sold industrywide in the U.S. during March, about a 41% drop from year ago levels, but up 16% from February and 22% from January’s low point.
Sales in March are typically better than the first two months of the year, though. And the seasonally-adjusted annual sales rate, or SAAR, is likely to be close to the 9.1 million rate in February, which at the time was a 27-year low. GM estimates the March SAAR would be closer to 10 million than 9 million.
Ford also disclosed that first quarter production ended 26,000 vehicles short of its most recent forecast. And production cutbacks are not over at Ford, as it halted production at assembly plants in Kansas City and Chicago for the next three weeks.
The Kansas City plant is one of two that make its F-150 pickup, Ford’s best-selling vehicle. The Chicago plant makes the Ford Taurus as well as Mercury and Lincoln vehicles. Ford spokeswoman Angie Kozleski said the shutdowns do not reflect a change in second quarter production targets, however.
Source
