Sales increase slightly, at GM and across the board
Industry-wide sales of new vehicles increased a mere 1.2 percent in April despite strong sales by several Japanese automakers. The overall pace of sales was a disappointing 16.8 million units, setting the stage for an increase in incentives.
Paul Ballew, general director of market analysis at GM — where sales increased a meager 1.2 percent — noted it wasn't unusual for incentives to increase in late spring and summer as manufacturers clear out older models ahead of the new model year. Nonetheless, GM expects sales to accelerate over the next few months as the economic recovery gains momentum, Ballew said.
"We see nothing that prompts us to revisit our expectations," said Ballew, who said GM still expects industry sales to top 17 million units this year. Sales through the first four months of 2004 are up 3.6 percent or about 200,000 units, he noted.
Meanwhile, Ford Motor Co. and Honda reported a drop in sales during April and DaimlerChrysler, Hyundai, and Volkswagen reported only small or negligible increases in sales. Nissan, Toyota, and BMW reported double-digit increases in sales; sales improved for Mitsubishi, Mazda, Suzuki, and Subaru.
Gary Dilts, Chrysler Group vice president of sales, said, "It's not a bad month, but it's not up to the optimistic levels we had seen." Dilts said Chrysler's sales increased one percent last month. The Mercedes-Benz Group's sales increased 2.6 percent. Two Japanese carmakers outpaced sales in April, with Nissan posting a 14-percent increase in sales and Toyota reporting a 10-percent increase in sales.
"The industry is benefiting from a healthy first-quarter economy," said Jim Press, TMS executive vice president and COO. "Despite rising fuel prices, economic indicators, such as gross domestic product, employment and consumer spending were all up, giving a boost to April automotive sales." The Toyota Division recorded its best-ever April sales of 143,574 vehicles. The Lexus Division also reported best-ever April sales of 23,555 units, up 10.7 percent, Press said.
Honda, though, reported its sales dropped four percent, and Ford also reported a four-percent drop in sales. "April wasn't up to par for us," said George Pipas, Ford sales analyst, who emphasized that a one-month drop in sales wasn't a cause for alarm. "The mix isn't as favorable as it was, but one month's sales results aren't going to knock the gyroscope off the table." Pipas also told analysts during the conference call that it is way too early to assume that rising fuel prices, which are hovering near $2 per gallon, are undermining sales of big sport-utility vehicles. Sales of the Ford Expedition, Lincoln Navigator, and Ford Excursion all dropped in April. Expedition sales dropped 33 percent, Navigator sales declined 25 percent and Excursion sales dropped 16 percent. Sales of all three vehicles had been exceptionally strong a year ago and all three came under significant competitive pressure during April, Pipas said.
Dilts and Ballew also said they saw no signs that fuel prices were beginning to hurt sales of big vehicles and engines. Pipas said Ford's inventory levels also are manageable. The company's inventory of unsold vehicles increased during April to nearly 1 million units. Analysts expressed some concern the inventories might be too high. "The inventories will decline," Pipas said. "One plant is down already and another plant will go down. We are able to manage our way through."