GM's 1Q global sales fall, trails Toyota
If they think the 2nd half of the year will be better they are crazy. We're in downward spiral that may last quite some time.
From Automotive News:
GM's 1Q global sales fall, trails Toyota
Japanese automaker sells 2.41 million vehicles in quarter
April 23, 2008 - 6:25 am ET
UPDATED: 4/23/08 3:44 p.m. EDT
DETROIT (Reuters) -- General Motors on Wednesday posted a first-quarter decline in global sales after falling in North America, trailing Toyota Motor Corp. decisively in the period as the world's top automaker.
GM also said second-quarter U.S. auto sales may be weaker for the industry than the first quarter as fuel prices rise. But the automaker still expects a recovery in the second half of 2008 and has seen minimal spread of U.S. economic problems into the rapidly growing emerging markets.
"What we're wondering and asking ourselves is perhaps the second quarter will be weaker than the first quarter," GM Chief Sales Analyst Mike DiGiovanni told analysts and reporters after saying GM has factored a weaker second quarter into its plans.
"That said, we still believe ... the fundamentals are in place for a second-half recovery," DiGiovanni added.
DiGiovanni said April sales may have weakened "a bit" from March, but later said the results have been similar.
GM reported a 0.6 percent decline in global sales to 2.25 million vehicles in the first quarter, falling behind Toyota, which reported sales rose 2.7 percent to 2.41 million vehicles in the January-to-March period.
GM and Toyota were roughly even in 2007 for the top spot among the world's automakers, with GM slightly ahead if sales from a China business were included.
DiGiovanni said GM had anticipated Toyota would outsell it during the first quarter and had outsold the largest U.S. automaker in the first quarter of 2007 as well.
"We would like to be No. 1 in sales at the end of the year and we're going to compete hard for every sale to try to do that, but our focus right now is on profitable, sustainable growth across the entire world," DiGiovanni said.
GM reported robust demand in the emerging markets and growth in Europe that could not offset a 10.2 percent decline in North America to 947,498 vehicles, where a slowing U.S. economy and rising gasoline prices have pressured sales.
GAS PRICES A CLEAR HEADWIND
With truck-heavy vehicle lineups, GM, Ford Motor Co. and Chrysler LLC are feeling the pinch of a consumer shift toward smaller, fuel-efficient cars in the United States, while Toyota and Honda Motor Co. expand market share.
GM reported sales gains in its mid-size car and crossover segments in the United States during the quarter, while truck deliveries fell 15 percent.
GM also has seen downward pressure on vehicle transaction prices in the United States and Europe, DiGiovanni said.
Sales in Latin America, Africa and the Middle East rose 19.6 percent, while sales in its Asia-Pacific region grew 5.8 percent, GM said. It posted a 3.3 percent sales increase in Europe in the last quarter.
Overall, GM expects global demand for cars and trucks to rise about 4 percent in 2008 from the 70.6 million vehicles in 2007, slowing from a 4.8 percent growth rate last year.
GM, which reported a $39 billion loss in 2007, is grappling with a subprime meltdown, record oil and gas prices, and tighter credit that analysts warn could combine to push U.S. light-vehicle sales to as low as 15 million units in 2008.
DiGiovanni said the second-half recovery forecast has been based on expectations that a positive impact from the government economic stimulus package will not be felt until May, and that Federal Reserve interest rate cuts take about six months to begin to affect the economy.
One big caveat to GM's outlook is the price of gasoline.
Crude oil, which accounts for about 70 percent of the cost for making gasoline, hit nearly $120 a barrel Tuesday and the average price U.S. drivers paid for gasoline has soared to a new high of $3.51 a gallon, up 64 cents from last year.
"This is clearly a headwind that we didn't anticipate would be to this level, so that's factored into our thinking now too ... to the fact that we think the second quarter may be weaker than the first quarter," DiGiovanni said.
In North America, the automaker also has been pressured by a two-month UAW strike against American Axle & Manufacturing Holdings Inc , a major supplier to GM.
GM has at least partly idled about 30 plants in North America because of that strike, which has mainly affected production of slower selling large SUVs and pickup trucks, but has begun to affect some car production as well.
The UAW also has pressured GM with a strike at a plant where it assembles faster selling crossovers -- smaller SUVs that are built on a car platform, are easier to drive and get better gas mileage than larger truck-based SUVs.
DiGiovanni said GM is not treating the strike that started last week at its Lansing Delta Township plant lightly, but the walkout has not affected company sales.