Unsold 2008 Sequoias sit at a Toyota dealership in the southeast Denver suburb of Centennial, Colo., Sunday, Feb. 3, 2008. Toyota Motor Corp.'s U.S. sales slipped 3 percent in February as sales of its luxury sedans and sport utility vehicles plummeted. (AP Photo/David Zalubowski)

Automakers Suffer February Double Whammy

DEE-ANN DURBIN | March 3, 2008 06:04 PM EST | AP

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DETROIT — Automakers got hit where it hurts in February, with U.S. sales of their most profitable vehicles _ trucks, sport utilities and large sedans _ plunging as consumers reacted to high gas prices and the possible recession. General Motors Corp. and Ford Motor Co. announced second-quarter production cuts in the face of the falling sales.

GM reported a sales decline of almost 13 percent for the month while Ford's sales slumped 7 percent, Chrysler's tumbled 14 percent and Toyota's fell 3 percent. It was expected to be a difficult month for automakers as consumer confidence continued to slide. Declines in home construction also have significantly weakened truck sales.

Mark LaNeve, GM's vice president for North American sales and marketing, said tightening automotive credit standards may also be hurting sales.

"On the edges of a difficult market, it's one of those things that makes it more difficult," LaNeve said.

If the February sales rate held steady for the full year, U.S. sales would be 15.4 million units in 2008, according to Autodata Corp. That's down from a rate of 16.6 million units last February.

Honda Motor Co. bucked the trend, posting a 5 percent increase in U.S. sales as booming sales of its small cars and crossovers picked up the slack from its slumping Ridgeline pickup and luxury sedans. The subcompact Honda Fit saw sales jump 62 percent. Honda's sales were up nearly 2 percent for the first two months of the year.

GM said its sales decline was led by a 19 percent drop in sales of trucks and SUVs. Sales of Chevrolet full-size pickups were down 29 percent for the month. Large sedans didn't fare much better; sales of the full-size Buick Lucerne were down 26 percent. GM's sales dropped 6 percent in the first two months of the year.

GM said the comparison with last February was a tough one, since retail sales hit a high mark for the year in February 2007. Still, the company responded to the downturn by cutting North American production by 5 percent in the second quarter to 1.08 million vehicles.

LaNeve said that while a weeklong strike at American Axle and Manufacturing Holdings Inc. has idled some GM plants, the company has enough inventory of trucks and SUVs to last at least 60 to 90 days.

"Right now it's not a threat to us doing business given our relatively healthy inventory situation," he said.

Toyota Motor Corp. said its car sales fell 4 percent while its truck sales were flat for the month. The aging Avalon full-size sedan was down 30 percent compared to last February. Toyota saw particular weakness in its luxury Lexus division, where sales of its flagship LS 460 sedan fell 25 percent for the month. Toyota's overall sales were down 2.5 percent for the year.

Mark Templin, the general manager of the Lexus division, said U.S. luxury sales fell in the first two months of 2008, but the company is still predicting that luxury sales will end the year flat compared to 2007.

This year is expected to be the slowest in a decade for the U.S. auto industry, but automakers are still predicting sales will pick up in the second half thanks to the federal stimulus package and pent-up demand. In the meantime it will be tough going, and the biggest casualties are the kinds of expensive vehicles automakers counted on for profits in the past.

"These segments could get tougher before they get better," said Randy Pflughaupt, vice president of marketing for Toyota's U.S. division.

Ford said sales of its crossovers were brisk in February, but buyers shunned its large sedans and SUVs. Combined sales of Ford's largest SUVs were down 22 percent in February. Ford's car sales dropped 9 percent while truck sales fell 5 percent. The automaker's sales decreased 5.5 percent for the first two months of the year.

Ford said it will cut shifts at factories in Chicago, Louisville, Ky., and Cleveland by this summer and reduce North American production by 10 percent in the second quarter to 730,000 vehicles. The Chicago factory makes the Ford Taurus and Mercury Sable sedans and Taurus X crossover vehicle, while the Louisville Assembly plant makes the Ford Explorer and Mercury Mountaineer sport utility vehicles. The Cleveland plant makes engines.

Ford's top U.S. sales analyst, George Pipas, said consumers have been moving away from larger sedans such as the Taurus for the last two years. Taurus sales fell 26 percent in February, while sales of the compact Focus rose 11 percent.

"It's not just a Ford thing," Pipas said. "All the action in the passenger car market has been in the small-size category and the mid-size category."

Chrysler LLC said its car sales rose 9 percent, largely on the strength of small cars such as the Dodge Caliber subcompact, which was up 10 percent for the month, and the mid-size Dodge Avenger, which rose 60 percent. But its truck sales fell 22 percent. Chrysler's newly redesigned Dodge Caravan minivan was down a disappointing 32 percent for the month.

Nissan Motor Co. said its sales rose 1 percent thanks to a strong showing by its Versa subcompact. Like other automakers, Nissan also reported strong crossover sales, with its recently redesigned Murano up 6 percent. Ford's Edge crossover gained 46 percent for the month, while GM's GMC Acadia rose 33 percent.

Automakers responded to the weakness in February by increasing incentive spending, a trend that's expected to continue through the summer, according to Jesse Toprak, chief industry analyst for the auto information site Edmunds.com. The average incentive per vehicle was $2,435 in February, up 8 percent from the year before. Toprak said European automakers were particularly aggressive with incentives, helped by the strength of the euro.

The Associated Press reports unadjusted figures, calculating the percentage change in the total number of vehicles sold in one month compared with the same month a year earlier. Some automakers report percentages adjusted for sales days. There were 25 sales days last month and 24 in February 2007.

GM shares fell 8 cents to $23.20 while Ford shares lost 35 cents, or 5.4 percent, to $6.18 and Toyota's U.S. shares gained 53 cents to $109.08.

___

On the Net:

Chrysler LLC: http://www.chrysler.com

Ford Motor Co.: http://www.ford.com

General Motors Corp.: http://www.gm.com

Nissan Motor Co.: http://www.nissandriven.com

Toyota Motor Corp.: http://www.toyota.com


 
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Who can afford a car when everything else cost so damn much? Don't separate the cost of everything from the cost of everything else. We are living in a society of rip-offs. I'd love to have a new car. God knows I need one. But I have to consider unstable utility costs, thieving insurance companies. fuel, young kids to care for. I don't know what's worse Al-Qaeda or congress, Bush and the corporations.

    Favorite    Flag as abusive Posted 10:08 PM on 03/04/2008

Large cars and trucks are not selling well?

It's almost like people are thinking about how much it will cost to keep them on the road.

Nah, that can't be happening!

    Favorite    Flag as abusive Posted 06:29 PM on 03/04/2008

after years of gross mismanagement and profound failure to understand what Honda and Toyota figured out, US automakers will no doubt give their executives golden parachutes as they lay off thousands of workers

    Favorite    Flag as abusive Posted 05:54 PM on 03/04/2008

Why we cannot import German Cars which get at least 45 mpgs per car but it has to have
US made specifications. Now we know what they are consisting of, gas hogs to make
Bush/Cheney happy. That is why Bush only upped the mpgs by 1.8. And then he called
us energy dependent.

    Favorite    Flag as abusive Posted 02:25 PM on 03/04/2008

Which reminds me what's taking GM so long to bring the Saturn Astra and the Pontiac G8 (and if they are smart the Chevrolet equivalent-nah that would be thinking too forward) to auto showrooms?

    Favorite    Flag as abusive Posted 02:48 PM on 03/04/2008

They're coming. If you want the very capable Ford Focus (the European version, not the crap US one) you can buy it. But it'll say Volvo or Mazda. But you can't get the Ford Mondeo, which our friends in the UK press say is the best family car in the world. And you can't get the European Caddy (why would you want one anyway?) but you can get most of it as a Saab.

After decades of building smaller, better handling and far more economical vehicles and withholding them from our market, they've changed their minds.

And we have the success of the Mini Cooper for it. It started the wave, that has brought us the Versa and the Yaris (which are shit) and the Fit, along with the C30 and the Smart ForTwo, and will probably bring the Fiat 500. We will also get the BMW 1 series, and the Audi A1, all vehicles that are dramatically smaller than the US market has historically seen.

    Favorite    Flag as abusive Posted 05:31 AM on 03/05/2008

US Auto Sales Sink----time to start building the Amphicar again.

    Favorite    Flag as abusive Posted 11:59 AM on 03/04/2008
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Ba-dum-pa!

    Favorite    Flag as abusive Posted 08:34 PM on 03/04/2008

Anyone seen the prices of used vehicles lately? Talk about inflation, you can almost buy new at these prices.

Got Rope?

    Favorite    Flag as abusive Posted 11:49 AM on 03/04/2008

US auto companies still refuse to recognize that the gravy train (big trucks, SUVs, etc.) has left the building. They continue to churn out the big gas guzzlers and more and more of us go to companies that produce products closer to what we want.

I looked over a review of vehicles, recently, considering trading for a newer, more fuel-efficient model. What do they considert "fuel-efficient" these days? Vehicles that get mpg in the upper-20s to mid-30s! That's fuel efficient?!? Are they really that ignorant?!?

Why is it that Corporatists worship "the Market" up until it shows demand for something other than what they want?

I don't want to make any major purchases until the Republicans are out of office, anyway. Maybe someone will bring a real fuel-efficient car to market, in the meantime.

    Favorite    Flag as abusive Posted 11:32 AM on 03/04/2008
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Very valid points, Cathexis.

You nailed the MPG thing. The EPA estimates are always 2MPG higher than real world. The carmakers can't build what we want, something that gets AT LEAST high 30s to low 40s without being a stripped down POS. My last commuter was an 89 Civic that got 32MPG in the city and 36 on the highway. New cars that only get 2-3 MPG better than my 2000 Acura aren't worth buying.

    Favorite    Flag as abusive Posted 08:47 PM on 03/04/2008

New cars are much heavier. They have air bags, ABS, and significantly stronger safety cages, which all add to the weight. And they have stronger engines.

That's why fuel economy is down- they are actually getting much more out of a gallon of fuel, but they are making much heavier cars. But they really are much safer!

    Favorite    Flag as abusive Posted 05:33 AM on 03/05/2008

Build crap, earn crap!

    Favorite    Flag as abusive Posted 01:25 AM on 03/04/2008

You can buy vehicles in Europe that get 75 mpg. I just read a review of some big SUV's, they got about 12mpg. They were all $50,000 rigs. Now throw the price of gas on that and you have some idea what's happening.

    Favorite    Flag as abusive Posted 12:48 AM on 03/04/2008
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Goodness! An absolute bloodbath.

Notice how he snuck in the recent tightening of credit standards may be hurting sales as well. Not good.

    Favorite    Flag as abusive Posted 05:19 PM on 03/03/2008

Ever increasing energy prices are now undermining all debt. Through higher prices for food and fuel but also the increases severely undermine economic activity in the future crippling the ability to service the debt.

    Favorite    Flag as abusive Posted 05:26 PM on 03/03/2008

Can you blame the public ? Oil prices are surging while salary and wages are slipping and Congress has done little to nothing to increase MPG.

Peak Oil looks like it is here and almost nothing has been done to plan for it .

    Favorite    Flag as abusive Posted 04:42 PM on 03/03/2008
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Oh, I think they planned for it, alright. Whether their plan will succeed or fail under the weight of their own greed, is yet to be determined. Some of the constitution is still intact, their permanent majority is far from assured and the economic meltdown has their prints all over it. I think they lit the fuse prematurely and Bushco is still inside the blast zone.

    Favorite    Flag as abusive Posted 11:33 AM on 03/04/2008
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