Auto sales plunge in face of $4 gas

Spectre

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From http://money.cnn.com/2008/06/03/news/companies/autosales/?postversion=2008060315:

Auto sales plunge in face of $4 gas

With gas at record highs, buyers stay away from SUV and pickup models, hitting May sales at GM, Ford and Toyota.

By Chris Isidore, CNNMoney.com senior writer
Last Updated: June 3, 2008: 3:54 PM EDT


NEW YORK (CNNMoney.com) -- U.S. auto sales tumbled in May as buyers fled from pickups and sport utility vehicles in the face of average gas prices that are now just shy of $4 a gallon.

The trouble hit not only U.S. automakers General Motors (GM, Fortune 500), Ford Motor and Chrysler LLC -- which have long depended on sales of pickups and SUVs -- but also trimmed the sales of their top Japanese rival Toyota Motor (TM).

But other Asian automakers held up reasonably well. Nissan (NSANY) reported a narrow sales gain while Honda Motor (HMC) and Kia rode American buyers' new interest in fuel economy cars to post record sales in the month.

In fact, Honda passed Chrysler in U.S. sales for the first time. What's more, the Honda Civic beat out the Ford F Series pickup to become the nation's best selling vehicle for the first time on record as well. The Toyota Camry also topped F Series sales in the month.

Labor pains for GM

GM reported that overall sales plunged 27.5% in the month, far worse than the 19% drop forecast by sales tracker Edmunds.com.

The declines were led by the 37% tumble in the sales of light trucks, such as pickups and SUVs. But even sales of cars fell 14% during the month.

GM was hit not only by rising fuel prices and the downturn in the U.S. economy, however. It was also hurt by a series of strikes that hit production of some of its hotter vehicles, including the Malibu sedan and a series of some of its popular crossover vehicles.

GM said it believed it lost between 15,000 and 18,000 vehicle sales because of the labor problems, about 6% to 7% of its reported sales.

"We're very pleased this is behind us," said Mike DiGiovanni, GM's chief forecaster. He said that GM maintained 20% of total U.S. retail sales in the month, which he termed remarkable given the combination of labor disruptions, oil prices and a weak economy.

The rapid shift in buyer preference caused GM, the nation's No. 1 automaker, to announce earlier Tuesday that it planned to close four North American truck plants as it tried to shift production to more fuel-efficient vehicles.

Mark LaNeve, GM's vice president of North American sales, admitted that his earlier prediction of a recovery in auto sales in the second quarter were clearly wrong. But he said GM is still hopeful this is close to the bottom in the market and that sales will firm up in the second half of this year.

"Either way, we're working through it and taking prudent action," LaNeve said.

Chrysler down to No. 5

Chrysler LLC, the privately-held automaker that was purchased by Cerberus Capital Management last year, saw sales fall 25%.

The company, which had long held the title of No. 3 U.S. automaker through 2005, fell to fifth place in sales as it was passed by Honda. Toyota is number two and Ford is the third largest in U.S. auto sales.

Chrysler, which has been offering buyers a chance to lock in $2.99 gas prices as part of their purchase, said much of the decline was due to a unusually high 40% cut in monthly fleet sales to businesses such as car rental companies.

The company also said that car sales fell at a higher rate than light truck sales. Still, that appeared to be the exception rather than the rule in May.

Industrywide, the trend was clear -- Americans were more serious about fuel economy than at any time in the past.

"We've never seen this big of a change in the product mix, this fast," said Jesse Toprak, chief industry analyst for Edmunds.

"Certainly five to ten years from now, you're going to look back and say the spring of '08 was the turning point. Even if gas prices go down for a month or two, consumers are not going to rush back out and buy SUVs. This appears to be a permanent shift," Toprak added.

Ford reported that overall U.S. sales were down 16 percent, even worse than the forecast of a 9% drop from Edmunds.com. Sales of light truck models, such as SUVs, pickups and vans, tumbled more than 25%.

Ford (F, Fortune 500) had warned of its own sales problems last month when it announced it was cutting light truck production and looking at closing some additional plants.

Ford CEO Alan Mulally said at that time that fuel prices had caused a "tipping point" that had permanently changed buyer's preferences and would cause losses in its North American auto unit to continue through next year.
Smaller cars selling, but...

Ford posted a narrow 3% gain in the sales of car models, as models such as the Fusion and Focus soared. Retail sales of the Focus more than doubled.

"Our products and our dealers are getting us back in the car business," said a statement from Jim Farley, Ford group vice president of marketing. "We're only just beginning."

And Toyota said that sales of its car models were essentially flat in the quarter.

But Toprak said even the strong car sales are not necessarily good news for Ford or other U.S. automakers.

"The change in product mix is a huge issue," he said. "They might be talking up their car sales, but the thing that they're not mentioning is how they're going to make money with the small cars. They're lucky if they're breaking even."

To that end, sales of some of the vehicles that Ford has depended most on for profits fell particularly sharply. The F-Series pickup had sales plunge just over 30%, while the Explorer, the midsize SUV that once was the nation's best-selling utility, tumbled 41%.

Ford responded to the weak pickup sales by announcing it was bringing back its "employee pricing" offer on the F Series through June. Similar "employee pricing" programs by Detroit's Big Three in 2006 resulted in strong summer sales that year.

Some pain for Toyota too

Toyota reported a 4% drop in combined sales of its Toyota and luxury Lexus brands. Edmunds was forecasting a 3% decline. Sales of light trucks fell 12%, while its car sales were flat.

Toyota introduced the Tundra, its first full-size pickup offering a year ago. Tundra sales fell by nearly a third in May. But Toyota had enough fuel efficient vehicles, such as the sub-compact Yaris, to limit its overall sales decline.

Surprisingly, the Toyota Prius, the fuel efficient hybrid car, actually saw sales tumble 37% from year ago levels. But it appears the reason for this is that buyers were not able to find one as many dealers sold out of existing Prius inventory.

"The Prius is as hot as any vehicle I've ever seen in the business," said Mike Maroone, president of AutoNation (AN, Fortune 500), the No. 1 dealership for all the major automakers. "People are looking at fuel economy and environment in different terms than they have in the past."

Maroone said that in addition to rising fuel prices, general economic worries such as higher unemployment and tighter credit are squeezing auto sales.

"There's a lot of pent-up demand out there. Our Internet and phone traffic are up. But I think there's a lack of consumer confidence," he said.

Overall, Edmunds forecasts that overall U.S. sales fell 7% in the month, with other experts predicting the worst May sales in 20 years. To top of page
First Published: June 3, 2008: 12:18 PM EDT

Yup, that's right. The F-150 is now *third* behind the Civic and Camry, and I don't think it's going to reach #1 ever again. Good riddance to that UAW built rubbish.

The top two cars in America are now *non-union* built.
 

Spectre

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Yup. East Liberty, Ohio and either Georgetown, Kentucky or Lafayette, Indiana, respectively.
 

prizrak

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Can't wait till all those stupid ass SUV's are off the road, fucking hate them. Goodbye UAW we hardly knew ye, yet we fucking hated your dumb guts.
 

skr

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0,67? per litre, that would be a reason for me to get a pick-up truck :D:D:D
 

Spectre

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All I can say to these news is: Welcome to the real world...
Yes to that for UAW. No to that for our fuel costs. Our fuel costs are high because of the current low value of the dollar AND the high cost of oil (thanks, speculators...). Unlike Europe, where the high cost of fuel is entirely due to TAX, TAX, TAX, and MORE TAX.

Once (and if) oil prices subside to a more reasonable level, so will US fuel prices.
 

MacGuffin

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Unlike Europe, where the high cost of fuel is entirely due to TAX, TAX, TAX, and MORE TAX.
It's true that a third of our current fuel prices in Germany is due to tax. So take it away and we still pay about twice as much as you in the USA.

You live in a biotope, man, no matter how you turn it.
 

D-Fence

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American Carmakers get owned now by the Germans in terms of downsizing like the Germans did get by the Toyota Hybrids. We were too lazy developing Hybrids, Americans were too lazy developing small charged engines. Let's see where this ends


I might add on this occasion that yesterday was a historic day for me. I figured out my European LPG is cheaper than American regular fuel.

On a side note: I got a 9l/100km LPG car for sale, starting price 50.000$ ^^
 

cvrefugee

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It's true that a third of our current fuel prices in Germany is due to tax. So take it away and we still pay about twice as much as you in the USA.

You live in a biotope, man, no matter how you turn it.
Fuel-efficient cars are not sold here. I can't even buy a diesel VW in California because of the stupid emission laws. The best we can get is 30-40 mpg. In Europe you guys have awesome little cars that get great gas mileage, so it evens out more than you think.
 

Spectre

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It's true that a third of our current fuel prices in Germany is due to tax. So take it away and we still pay about twice as much as you in the USA.

You live in a biotope, man, no matter how you turn it.
1. Since you don't have the population, you do not have the number of buyers purchasing the volume of fuel that we do here.
2. Lower volume = higher prices.
3. Higher volume = lower prices.

The interesting thing is that you also (apparently) have a lot of "hidden" taxes that get passed on to the buyer, which adds to the cost of a litre of fuel as well. If you remove the taxes, your fuel cost *should* be on par with ours because the additional volume discounts we get should be negated by the fact that transport costs for the fuel are much much lower (since Europe is largely supplied by pipeline as opposed to tanker). It's not, though. Why is that? Answer: Hidden costs and charges being passed on from the manufacturer and reseller to the customer.

American Carmakers get owned now by the Germans in terms of downsizing like the Germans did get by the Toyota Hybrids. We were too lazy developing Hybrids, Americans were too lazy developing small charged engines. Let's see where this ends
Lazy? Probably not. See the EV1 and all of its variants, among others. Clueless and not paying attention in the rush to exploit SUV sales? Yes.

Detroit suffers from Unwarranted Cultural Superiority Syndrome as well as a case of deep-seated Not Invented Here syndrome.

I might add on this occasion that yesterday was a historic day for me. I figured out my European LPG is cheaper than American regular fuel.

On a side note: I got a 9l/100km LPG car for sale, starting price 50.000$ ^^
American LPG is cheaper still. Especially since we have a *LOT* of it. Conversion kits and fuelling stations aren't very common though; CNG and LPG cars were both tried by many in the 70s. The resulting giant fireballs when the tanks lost containment in accidents tended to dampen enthusiasm for the system.

Fuel-efficient cars are not sold here. I can't even buy a diesel VW in California because of the stupid emission laws. The best we can get is 30-40 mpg. In Europe you guys have awesome little cars that get great gas mileage, so it evens out more than you think.
That's because you live in California, where all good things are banned.:mrgreen:

That said, the California Air Resources Board do have a point. Diesels do pollute and their exhaust byproducts is soot and various carcinogens. Not so great in the long run.
 

prizrak

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That said, the California Air Resources Board do have a point. Diesels do pollute and their exhaust byproducts is soot and various carcinogens. Not so great in the long run.
There are alot of ways to combat that, I was reading about the V12 TDI R8 and the engine runs as clean as the petrol if not cleaner. Necessity is the mother of invention, if diesel cars would be more popular the manufacturers would come up with ways to clean the exhaust.
 

hajj

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All I can say to these news is: Welcome to the real world...
Welcome to 2002!! Petrol was around 1? per litre back then, which should be around $4 a gallon at 2002's exchange rate.


I might add on this occasion that yesterday was a historic day for me. I figured out my European LPG is cheaper than American regular fuel.

On a side note: I got a 9l/100km LPG car for sale, starting price 50.000$ ^^
Got any more info on mileage and price?
 

Spectre

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Surprisingly, the Malibu is apparently selling well - for a GM sedan.

And reviews plus owner experience seem to bear out the fact that it's apparently a good car for its class. You have to remember, it's an Epsilon/Extended car, which means that it's basically an Opel Signum or Fiat Croma.

Unfortunately from a design standpoint, it has the typical "GM Fatal Flaw" that GM seems to be bound to include in every new car design that would otherwise sell well. The Malibu has a spot for an in-dash navigation system. It has more than enough room for an in-dash nav. It's got a bezel that looks like it's designed to take an optional nav system.

There is no nav system offered.

And every other car in this class except the Hyundai offerings has nav as an option.

Ooops.
 

_HighVoltage_

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I have to admit I haven't driven the new one, but after driving a 2003 Malibu I have sworn never to enter one again! It was awful in any sense of the word.
 

Jay

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On related news, my dealership sold a lot of Subarus and Nissan's this past month. We can't keep the new Forrester in stock, and Altimas are shipped near daily.
 

Spectre

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The old Malibu was an Americanized Vectra - yes, the one that JC had such problems with, but with a much lamer engine.
 
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