June Sales Slide to 15-Year Low

July 2, 2008
Whether you blame the generally sour economy, soaring oil prices, or a weak housing market, there's little good to read into the numbers for June. U.S. auto sales plunged by 18.3 percent in June. Worked out on an annualized basis, the industry would sell an anemic 13.6 million vehicles, a far cry from the 17-million-plus units automakers moved earlier this decade.

Significantly, the decline was actually twice as severe as the plunge taken in the months after the September 11 terrorist attacks nearly froze the American economy. When you tally up all the numbers for the first half of 2008, the industry has hit a 15-year sales low.

Virtually every manufacturer suffered, in June, but there were a few notable exceptions: Honda, in particular, Hyundai, and Volkswagen. Meanwhile, though its light truck sales have slumped spectacularly, General Motors actually posted an increase in retail passenger car sales - reflecting both some well-received new products and some effective cash-back marketing efforts.

"We felt that was a very successful month-end merchandising program," said General Motors director of sales, service, and marketing Mark LaNeve.

GM's campaign, which offered 0 percent financing for up to 72 months, still couldn't head off an overall 18.2 percent decline for the automaker in June. For the month, the company's market share actually rose, to 22.1 percent, reflecting just badly the rest of its competitors fared. For all of '08 so far, GM's share is 21.4 percent.

As in May, Ford Motor Co.'s big F-Series pickups were knocked down from the top of the U.S. sales charts, where they had collectively ruled for 27 years. The big trucks came in fifth among all models in June, behind such high-mileage imports as the Toyota Corolla and Honda Civic. For the month, the F-Series posted a 40.5 percent decline; the truck line is down 22.7 percent for the year to date.

The collapse of the one-time best-seller pushed Ford even more deeply into the No. 3 spot in the U.S. market. For the year to date, it holds a 15.5 percent share of the American auto market, but in June, that was down to 14.6 percent.

Now well-entrenched as the No. 2 maker is Toyota, with a 2008 share of 16.7 percent. But beset by its own problems in the truck market, Toyota sales plunged a surprising 21.4 percent last month, giving it a June share of just 16.3 percent. That actually widens the gap between GM and Toyota.

But whether the American maker can hold onto its lead is uncertain, according to analyst Rod Lache of Deutsche Bank. The overall monthly numbers, said Lache, were "largely in line with our expectations. We would caution investors from reading too much into GM's June sales as previous '0% financing' and 'employee discount' promotions have typically had the effect of (only) temporarily boosting its market share." Those numbers, he cautioned, "may fall back."

Automakers and industry analysts alike suggested that some of the plunge in June sales reflect a shortage of the high-mileage vehicles that U.S. consumers are increasingly seeking out. That includes products like the Toyota Prius hybrid, the new Chevrolet Malibu, and Honda's Civic - both in gasoline and hybrid configurations. Where the industry generally considers a 60-day supply of vehicles on dealer lots to be the norm, the typical Prius is delivered to a customer within a day of its arrival from the factory.

"That limited availability, we believe, had an impact," said George Pipas, chief sales analyst for Ford Motor Co.

What's in store in the months to come is perhaps more uncertain than at any time in recent decades. Complicating efforts to forecast the U.S. car market, analysts have to project what will happen to fuel prices, the availability of loans, and the recovery of the housing market.

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