Tags: GM | Sales | Fall | Higher | Gasoline | Prices | gas

GM, Ford Sales Fall as Higher Gas Prices Hit Buyers

Wednesday, 01 June 2011 11:36 AM EDT

General Motors Co., Ford Motor Co. and Toyota Motor Corp. reported U.S. sales in May fell, trailing analysts’ estimates, as higher gasoline prices and smaller discount offers deterred purchases.

GM deliveries dropped 1.2 percent to 221,192 vehicles, the Detroit-based automaker said today in a statement. The average estimate of three analysts was for a 1.5 percent increase. Ford light-vehicle deliveries fell 2.6 percent to 191,529, compared with five analysts’ average estimate for a 0.5 percent decline. Toyota’s U.S. sales tumbled more than analysts’ estimated.

Gasoline that has exceeded $3.50 a gallon since early March led some buyers to defer purchases, and automakers reduced sales incentives in May, said Don Johnson, GM’s vice president of U.S. sales. Industrywide deliveries may have dropped as much as 3 percent as other automakers’ inventories dwindled following the March 11 earthquake in Japan, Johnson said.

“Gas prices did have an impact not only on what consumers were buying but also their willingness to buy,” said Jeff Schuster, J.D. Power & Associates’ executive director of global forecasting. “Until we see a more progressive decline or we at least settle at a more stable level below $4 a gallon, we’ll still have buyers hesitating and waiting out purchases.”

GM fell $1.25, or 3.9 percent, to $30.56 at 2:15 p.m. in New York Stock Exchange composite trading. Ford declined 62 cents, or 4.2 percent, to $14.30. Toyota City, Japan-based Toyota’s American depositary receipts, each representing two ordinary shares, dropped $1.46, or 1.8 percent, to $81.83.

Toyota, Honda

Toyota and Honda Motor Co. led declines among major automakers as Japan-based manufacturers worked to recover from the earthquake and tsunami that idled factories and created a shortage of parts and vehicles. The disaster may result in 3 million to 3.5 million units of global production that will be lost or deferred until next year, according to IHS Automotive.

Toyota, which built 45 percent of its cars in Japan last year, reported a 33 percent drop in May deliveries, exceeding the 27 percent decline that was the average of three estimates. Tokyo-based Honda, the second-largest Japanese automaker by U.S. sales, said sales fell 23 percent, less than the 25 percent average of three estimates.

U.S. sales for Nissan Motor Co. dropped 9.1 percent last month, according to an e-mailed statement. The Yokohama, Japan- based company was expected to report a 7.3 percent decline, the average of three estimates compiled by Bloomberg.

Chrysler Sales

Chrysler Group LLC sales rose 10 percent to 115,393 vehicles. That topped the 9.5 percent increase estimated on average by five analysts. The Auburn Hills, Michigan-based company repaid $7.6 billion in U.S. and Canadian government loans during the month.

Hyundai Motor Co., South Korea’s largest automaker, reported a 21 percent sales increase, and affiliate Kia Motors Corp.’s deliveries climbed 53 percent. The companies, which operate separately, sold a combined 107,426 vehicles last month, more than either Honda or Nissan.

May light-vehicle deliveries may have run at a 12.1 million seasonally adjusted annual rate, the average estimate of 11 analysts surveyed by Bloomberg. The pace exceeded 13 million each of the last three months and was 12.6 million in January, according to researcher Autodata Corp.

Confidence among U.S. consumers in May unexpectedly dropped to a six-month low as incomes were squeezed by gasoline that averaged $3.90 a gallon in May. The percentage of consumers planning to buy a new vehicle within six months fell in May to 3.3 percent, the lowest since January, the New York-based Conference Board said yesterday.

Gas Prices

The average price of regular unleaded gasoline was $3.78 a gallon yesterday, according to AAA, the nation’s biggest motoring organization. The price reached $3.99 on May 4, the highest since July 2008.

GM repeated its forecast for U.S. industry deliveries of 13 million to 13.5 million this year, including medium- and heavy- duty trucks, as sales recover later in the year. The annualized sales rate may remain below 13 million until at least August, Johnson said today on a conference call.

The federal bailouts of the auto industry that included assistance to GM and Chrysler may result in losses of less than 20 percent of the $80 billion provided by the U.S. Treasury Department, Ron Bloom, White House adviser for manufacturing policy, said today at a briefing.

Treasury Stake

The U.S. wants to divest its ownership share of about 33 percent of GM and 6 percent of Chrysler “as soon as practical” and the Obama administration doesn’t have a “target price” to sell its remaining stakes, Bloom said in Washington.

“We gave a clear signal we’re not going to be long-term investors” in the auto industry, he said.

GM ended May with U.S. inventory of about 584,000 vehicles, up from about 577,000 units at the end of April. There were about 110 days of supply of large trucks at the end of May, and inventory of the Chevrolet Cruze compact car was about 37 days.

Ford raised prices by an average of $124, or 0.4 percent, per vehicle last month because of higher commodity costs, Todd Nissen, a spokesman for the Dearborn, Michigan-based automaker, said last week.

Ford may have reduced incentive spending by 2.5 percent in the month to $2,283 per vehicle, according to auto-pricing website Edmunds.com. Incentives for the industry may have declined 0.7 percent, led by a 46 percent drop for Honda and 27 percent decrease at Toyota, according to Edmunds.


The industry’s lower sales in May represent “a pricing- driven decline, not an economic indicator,” said Jeremy Anwyl, chief executive officer of Santa Monica, California-based Edmunds. “Sales will jump when prices drop.”

Average new-vehicle prices rose $608, or 2.1 percent from a year earlier, to $29,817 in May, according to TrueCar.com, an auto-pricing website also based in Santa Monica, California.

Ford said today on a conference call that the average transaction price for its models climbed 4 percent in May.

“We expect this temporary period of weakness to be followed by a pretty good economy in the second half,” Ellen Hughes-Cromwick, Ford’s chief economist, said today in a conference call.

Light-vehicle sales climbed to 11.6 million in 2010 from a 27-year low in 2009. Deliveries still were 31 percent fewer than the 16.8 million annual average from 2000 to 2007, according to Autodata. A 12.1 million rate this month would be a 4.3 percent increase from the 11.6 million pace in May 2010.

© Copyright 2024 Bloomberg News. All rights reserved.

General Motors Co., Ford Motor Co. and Toyota Motor Corp. reported U.S. sales in May fell, trailing analysts estimates, as higher gasoline prices and smaller discount offers deterred purchases. GM deliveries dropped 1.2 percent to 221,192 vehicles, the Detroit-based...
Wednesday, 01 June 2011 11:36 AM
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