Friday, March 09, 2007

GM sales buck Big 3 trend

Friday, March 02, 2007
GM sales buck Big 3 trend
Hot trucks, 0% loans fuel gains in February
Josee Valcourt / The Detroit News

For a month, at least, General Motors Corp. gained market share, its big trucks rebounded and new vehicles like the GMC Acadia crossover took off out of the gate.

While U.S. auto sales in February were far from a panacea for GM, they were a welcome shaft of light in what has been an otherwise bleak start to 2007 for Detroit's automakers.

GM's sales rose a surprising 3.7 percent, fueled by an 11 percent surge in retail purchases, even as Ford Motor Co. saw a 13.4 percent sales decline and demand for Chrysler Group products slid 8.3 percent, while parent DaimlerChrysler AG slipped 7.7 percent.

GM also picked up a point of market share, coming in at 24.6 percent, compared to 23.6 percent in February 2006.

A bright spot for the No. 1 automaker was its redesigned Chevrolet Silverado pickup, which saw a 26.5 percent increase and outsold Ford's F-Series pickups to claim the title of best-selling vehicle in America last month.

"Everyone expected their sales to be down," said Alex Rosten, an analyst with, a research Web site for car buyers. "Nobody expected their retail to be so strong."

Toyota, Honda, Nissan gain

Japanese automakers, meanwhile, kept their momentum going in February, with Toyota Motor Corp. sales soaring 12.2 percent, Honda Motor Co. gaining 3.2 percent and Nissan Motor Co. sales increasing 1.2 percent.

Even with GM's gain, however, sales will continue to be under pressure for Detroit automakers as economic forces including the slumping housing market and uncertainty on Wall Street add to the intense financial and competitive pressures already weighing on Detroit's Big Three.

"We're in for a very uncertain year because there are so many factors that can impact sales," Rosten said.

Still, Paul Ballew, GM's chief market analyst said the overall U.S. auto market is on track for a 17-million vehicle year in 2007. "It's fair to describe the industry as operating a bit below trend," Ballew said. "But I wouldn't say we're experiencing any further deterioration." A combination of new vehicles such as the Silverado, GMC Acadia and Saturn Aura sedan, along with free financing incentives rolled out in mid-February helped lift GM's sales, analysts say.

"You're seeing a company that has been paying attention to what their critics have been saying," said Rebecca Lindland, of Lexington, Mass.-based Global Insight Inc.

GM to trim production

GM ended the month with about 1 million vehicles in inventory -- two thirds of them truck models. Ballew said GM expects to trim its second-quarter production schedule by 62,000 vehicles as it continues to pull back on daily-rental sales.

Despite Toyota's growth and its own tumble, Ford was able to hold onto its spot as the No. 2 automaker. In recent months, Ford has slipped to as low as No. 4, behind Toyota and Chrysler.

Ford's February sales dropped largely because of declining sales to daily rental fleets and weaker demand for its bread-and-butter F-Series pickups.

To better match production with demand, Ford said Thursday it would cut factory output 14 percent in the second quarter, to 770,000 cars and trucks from 897,000 a year earlier. The company said more than 60 percent of the reduction is tied to Ford's ongoing effort to cut sales to daily rental fleets, which don't generate strong profits and can erode brand image. All three Detroit automakers are trying to cut rental fleet sales and bolster more profitable retail sales, which are vehicles sold to consumers at dealerships.

Ford has fewer F-150s

Ford sales analyst George Pipas acknowledged that some dealers feel the production cuts have gone too far. There were 100,000 fewer F-series pickups in inventory at the end of January than there were a year ago.

Ford, which finished February with a 16.7 percent U.S. market share, is also seeing its sales fall partly because of the discontinued Ford Taurus, which was sold to fleets and accounted for about 6 percent of the automaker's total sales, said Rebecca Lindland of Global Insight.

One of the few bright spots in Ford's sales results were its new crossovers: the Ford Edge and Lincoln MKX. In the vehicles' second full month on the market, Edge sales climbed to 13,563 and the MKX rose to 4,009.

Cisco Codina, head of sales, marketing and service for Ford North America, said both exceeded the company's projections.

Zetsche comments hurt sales

Chrysler Group's sales slide, which include the Chrysler, Dodge and Jeep brands, dragged down parent DaimlerChrysler, which also includes Mercedes-Benz. Chrysler sales were hurt by all the speculation swirling about its future since DaimlerChrysler CEO Dieter Zetsche said all options were open for money-losing Chrysler, including a possible sale.

"Chrysler Group faced some headwinds due to the speculation," said Steven Landry, vice president of sales and field operations.

In Metro Detroit, 70 percent of Chrysler Group sales are to employees and that demand fell off 30 percent as employees workers worried about their future. Chrysler hopes to see sales improvements in the next two to three months, Landry said.

Toyota was helped by strong demand for its cars, led by the Camry and Corolla.

The Prius hybrid also did well, nearly doubling sales to a record 12,227 cars from 6,547 last February. The rise in Prius sales reflects both an increase in output of the gasoline-electric cars and modest incentives Toyota now offers. Toyota says the Prius is becoming a mainstream vehicle.

"That trend-setter or early adopter? We've moved beyond that phase," said Jim Lentz, executive vice president of Toyota Motor Sales, the Japanese automaker's Torrance, Calif.-based U.S. sales arm. "A more mainstream buyer, three years into a model's life, is expecting some kind of incentive support."

Tundra pickup sales were down 8.5 percent at 9,669 units as outgoing 2006-model-year Tundras sold out faster than anticipated and Toyota has not yet shipped all versions of the new model.

Toyota expects to sell 200,000 Tundras in 2007 and expects to reach that annualized sales rate in the spring.

Lentz estimated 7 to 8 percent of sales were conquests from other brands. Deliveries of the biggest version of the new Tundra, the CrewMax, will begin later this month.

Despite stock market jitters, Toyota still feels bullish about the economy. Executives said the economic fundamentals -- inflation, interest rates, housing market -- would support an auto market of around 16.5 million vehicles. Because some automakers are reducing less profitable sales to fleet buyers, "the retail piece of that market may be stronger than it was last year."

Detroit News Staff Writers Bill Vlasic, Christine Tierney and Bryce Hoffman contributed to this report. You can reach Josee Valcourt at (313) 222-2575 or

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