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June 04, 2009 02:00 AM

Ford, GM post lower monthly sales declines

Chrissie Thompson
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    DETROIT (June 4, 2009)—Ford Motor Co. and General Motors Corp. in May posted their smallest monthly sales declines since last summer, helping the overall U.S. industry improve again while Honda and Toyota dropped more than 40 percent.

    Overall sales fell 33.7 percent, the smallest decrease since October's 31.9 percent. The seasonally adjusted annual rate was 9.9 million, the highest of 2009. May's industrywide sales of 926,130 marked the first monthly total this year above 900,000.

    "If you're rooting for the Americans, that's what passes as bright news: that they were down less than their competitors," said Efraim Levy, an equity analyst with Standard & Poor's.

    Ford Motor's 25.8 percent light vehicle sales decline was its lowest since last July, and GM's 29.0 percent skid reflected its smallest decrease since September. American Honda said its sales plummeted 41.5 percent from May 2008, when the company set a monthly sales record. Toyota Motor Sales fell 40.7 percent, and Nissan North America slid 33.1 percent.

    Chrysler L.L.C.'s sales tumbled 46.9 percent in May, dragged down by a decline of more than 90 percent in fleet volume stemming from its factory shutdown during bankruptcy. Retail sales fell 30 percent, the auto maker said.

    Last year's turmoil

    The smaller declines at Ford and GM, which filed for Chapter 11 reorganization this week, stem in part from comparisons to last year, said Jeff Schuster, executive director of forecasting at the market research firm J.D. Power and Associates.

    Average U.S. fuel prices in May 2008 hit $3.97 for a gallon of regular unleaded, according to AAA. The rising prices attracted consumers to Honda, a brand consumers view as fuel-efficient, Schuster said.

    Honda's sales rose 15.6 percent in May 2008 from the year-previous period, while GM's fell 27.5 percent, Ford's 15.9 percent, and Chrysler's 25.4 percent. Toyota gained share as its sales fell 4.3 percent.

    Last month's sales also indicate that some consumers are showing support for U.S.-based auto makers, Schuster said of Ford's and GM's results. President Barack Obama urged the nation to buy American vehicles as he announced Chrysler's bankruptcy on April 30. Schuster also said Ford is benefiting from not seeking government aid.

    Elsewhere in the industry, Volkswagen Group slid 12.5 percent. Daimler AG's sales fell 33.4 percent, and the BMW Group dropped 27.6 percent. Subaru slipped 5 percent; Mazda, 40.1 percent; and Hyundai-Kia 18.7 percent.

    The Chrysler effect

    Some analysts had said Chrysler's retail sales rate would show a boost from clearance sales at dealerships being terminated. On May 14, Chrysler told 789 of its dealerships that they would not have a future with Chrysler Group L.L.C., the new company set to be steered by Italian auto maker Fiat S.p.A. after a scheduled emergence from the auto maker's bankruptcy on Friday. Those dealerships have one week left to sell their Chrysler inventory.

    Ford said it sold 35,582 crossovers, more than any month since May 2008, and its Lincoln luxury brand posted an increase of 2.4 percent.

    Sales of 2,780 Insights drove a 3.5 percent increase in Honda's hybrid sales. The new Insight launched in May.

    Ford said it would begin a "Drive the Ford Difference" incentive program today, in which the auto maker will cover up to three months of payments on select vehicles, for a total not to exceed $2,100. Ford Credit will also offer 0 percent financing on some vehicles. The program lasts through June 30.

    Ford already is anticipating fire-sales at other auto makers' dealerships because of liquidations, said Ken Czubay, Ford's vice president of U.S. sales and marketing. In addition to the Chrysler closings, GM has notified 1,324 dealerships it does not plan to renew their franchises beyond October 2010.

    "For consumers and for the industry, the next 90 days will be challenging and volatile," Czubay said.

    The U.S. sales rate dropped below 11 million units in October, hitting lows not seen in more than a quarter of a century. The rate has hovered between 9 million and 10 million units this year amid an 18-month U.S. recession, the longest since the Great Depression.

    Last year's industry sales total was 13.2 million, down from 16.2 million in 2007.

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