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Automakers See Sales Fall By Double-Digits

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By DEE-ANN DURBIN

The Associated Press

Published: August 2, 2008

DETROIT - General Motors, Ford, Toyota and other automakers said Friday that their U.S. sales fell by double-digits in July as they struggled to keep up with consumers' growing demand for smaller, more fuel-efficient vehicles.
Nissan Motor Co. was the only major automaker to report a gain, with truck sales up a surprising 18 percent thanks in part to the new Rogue crossover. Nissan's overall sales rose 8.5 percent.

Automakers were expecting July sales to be at their lowest level in more than a decade as sales of trucks and sport utility vehicles continued to plummet and new troubles in the auto leasing market further wrecked consumers' confidence. They said things could get worse before they get better.

"We expect the second half of 2008 will be more challenging than the first half as economic and credit conditions weaken," Ford's marketing chief Jim Farley said in a statement.

Farley predicted it will be difficult for many consumers to obtain credit through next year because of tightening standards, and said that was a major reason the automaker lowered its sales forecast for the year. Mark LaNeve, GM's vice president of North American sales, said tightening standards for buyers with poor credit are costing the automaker sales of about 10,000 vehicles per month.

At the same time, automakers are having trouble matching their production with customers' sudden demand for smaller vehicles. Small cars represented 27 percent of sales in July, up from 21 percent in the same month last year, while demand for pickups fell to 11 percent from 14 percent the year before, according to George Pipas, Ford's top U.S. sales analyst.

Mike DiGiovanni, GM's executive director of global market and industry analysis, said if supply constraints remain at the same pace for the rest of this year, it would cost the industry about 300,000 sales, but as the year goes on and automakers adjust production, he expects that number to go down.

General Motors said its July sales plunged 26 percent, led by a 35 percent decline in sales of trucks and SUVs. Some car models showed strength, with Chevrolet Malibu sales jumping 79 percent from the same month a year ago. But even GM's car sales fell 12 percent as GM failed to keep up with demand for fuel-efficient vehicles like the subcompact Chevrolet Aveo.

Earlier Friday, GM reported a $15.5 billion second-quarter loss, the third-worst quarterly performance in the company's history, largely because of North American sales losses and expenses from a massive restructuring plan.

Ford Motor Co. said its U.S. sales fell 15 percent compared with the same month a year ago. Its car sales were flat, and sales of the Focus small car rose 16 percent. But sales of Ford's trucks and SUVs continued their steep decline, falling 22 percent.

Toyota Motor Corp. said sales fell 12 percent last month, led by a 27 percent drop in truck and SUV sales. Sales of its Prius hybrid fell 8 percent as Toyota failed to keep up with demand for the fuel-efficient car.

Toyota Motor Sales USA President Jim Lentz said Toyota is accelerating production of four-cylinder engines to meet demand, while Bob Carter, general manager of the U.S. Toyota division, said the company plans to boost production of the subcompact Yaris and the small Corolla by 40,000 units through October.

Chrysler LLC, whose lineup is more tilted to trucks and SUVs than any other major automaker, said its sales fell 29 percent, with truck and SUV sales down 30 percent. Chrysler said that was partly because of cuts in low-profit sales to fleets.

Even Honda Motor Co., which has reported sales increases in the past few months as consumers flocked to its fuel-efficient cars, said sales fell 2 percent in July. Honda's car sales were up 14 percent, but results were dragged down by a 22 percent drop in truck and SUV sales.

Honda said it was adjusting production to match increasing consumer demand for cars such as the Civic.

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