Hard-pressed General Motors and Ford Motor Co. surprised analysts and posted sales increases in January, halting a four-month-long string of sales declines that had cost both companies market share and had magnified other corporate difficulties.
Strong fleet sales last month, however, helped overcome softness on the retail side during January, GM and Ford officials said. Future prospects for both companies were clouded, however, by a decline in truck sales that suggested consumers are still looking for alternatives to traditional sport-utility vehicles.
Mark LaNeve, pointing to the 53-percent increase in sales of the Chevrolet Tahoe, insisted GM’s new full-size SUVs are off to a strong start. “Sales, production, inventory turn rates and dealer orders are all ahead of plan. It’s January, it’s early, but we’re optimistic that these great new products will be successful,” LaNeve added.
However, sales of other GM SUVs, pickup trucks and crossovers were weak last month.
Ford also reported a 7-percent decline in truck and SUV sales. The decline at Ford was paced by a 23-percent drop in sales of the Explorer and a 30-percent decline in the sales of the Expedition.
George Pipas, Ford sales analyst, insisted it was too soon to label the new Explorer a flop. “We don’t know what sales would have been without it,” said Pipas, who conceded there was still a lot of pressure on the SUV segment.
Both GM and Ford, however, were able to post sales gains for the month thanks to strong sales of passenger cars. Sales of GM passenger cars increased 15 percent and Ford passenger car sales increased 18 percent.
The same pattern prevailed at the Chrysler Group where passenger car sales went up and sales of trucks declined. “Our car business is up 20 percent, and our LX products are up 62 percent. The Dodge Caliber begins production (Wednesday) and gives us a strong entry into the small car segment with an attractive price starting at $13,985. We are now a full-time car player,” said Gary Dilts, Chrysler Group senior vice president for sales.
Overall, Chrysler Group sales increased 5 percent last month, ending two months of decline, he added.
The passenger car sales of all three companies were clearly bolstered by a strong dose of fleet sales, which offset a decline in retail sales, officials from GM, Ford and Chrysler conceded.
The start of the year traditionally is a strong month for fleet sales by all automakers and last month was no exception, said Dilts. Overall fleet sales, which include deliveries to both commercial and rental companies, account for between 20 percent and 25 percent of all light-duty vehicles.
Pipas said the strength of Ford’s fleet sales offset a decline in retail sales. Overall, Ford’s fleet sales increased by 6 percent and are expected to increase again this year, he said.
Almost 29 percent of GM’s sales also went to rental companies, which were rebuilding and restructuring their fleets. Chrysler officials also said they are aggressively pursuing sales to commercial customers.
Dilts said the relative strength of January sales should ease fears that forecasts predicting steady sales in 2006 were overly optimistic.
Overall sales were up about 7 percent and automakers pegged The annual rate of sales last month at a very healthy 16.9 million units and possibly higher.
“Dealers reported improving traffic in their showrooms and Internet lead generation as the month progressed and consumers became aware of our aggressive reduction in sticker prices,” noted GM’s LaNeve.
“January’s bright job market outlook and the uptick in
consumer confidence bode well for the industry, as do signs the economy has
bounced back from the
“Other in the industry are tightening their belts but we remain committed to steady, incremental growth,” said Dick Colliver, American Honda executive vice president. Hyundai also reported a 16-percent sales increase, while BMW, Mercedes-Benz and Audi also all reported sales increases. Mitsubishi also reported sales improved year over year.
However, Nissan reported sales were basically flat, dropping just 1 percent, as its big pickup truck and sport-utility vehicles lost ground in January.
Meanwhile, the positive sales reports were greeted with relief at General Motors and Ford. Last week, GM announced an $8.6 billion loss, and Ford outlined plans for a sweeping restructuring that is expected to eliminate 30,000 jobs.