Chrysler soars on new lineup; Ford, GM slip
From the Detroit Free Press:
Chrysler soars on new lineup; Ford, GM slip
June auto sales drop 2 percent in the U.S.
July 2, 2004
BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER
June proved to be a dark month for General Motors Corp. and Ford Motor Co., as sluggish demand for new cars and light trucks drove sales sharply lower.
The results were brighter in Auburn Hills, however, where the Chrysler Group's stable of new cars and trucks -- primarily the Chrysler 300 sedan, Dodge Magnum station wagon and Dodge Durango SUV -- gave a big boost to DaimlerChrysler AG.
U.S. sales of new cars and light trucks in June, which were announced by automakers Thursday, fell 2 percent to 1.4 million vehicles from a year ago. But they were down 12 percent for the Detroit-based GM and down 7.8 percent for Dearborn-based Ford. Both companies are slated to deliver new and redesigned products to showrooms later this year.
Sales for the Germany-based DaimlerChrysler were up 4.9 percent in June compared to the same month a year ago. While the Mercedes luxury division was up a mere 1.5 percent, the local Chrysler Group division that sells Chrysler, Dodge and Jeep vehicles was up a solid 5.2 percent.
That helped DaimlerChrysler boost its share of the market to 15.7 percent in June, up from 14.6 percent in June 2003, and to hold year-to-date market share at 14.7 percent.
"It's an important lesson that when you build compelling new product and price it to offer value to consumers, that consumers respond," said Paul Taylor, chief economist for the National Automobile Dealers Association.
He said the new products coming out of Chrysler, which also plans to release a new Jeep Grand Cherokee SUV and Dodge Dakota compact pickup later this year, are showing the value of the 1998 combination of Daimler-Benz AG and the old Chrysler Corp.
"This is the synergy from the merger, finally producing fruit in the marketplace," Taylor said. "This is an important milestone for DaimlerChrysler."
At the same time DaimlerChrysler improved sales, preliminary data suggests the automaker managed to not increase its incentives as much as its competitors, said Jesse Toprak, director of pricing and market analysis for the consumer Web site Edmunds .com. That's additional positive news for Chrysler because, while incentives can encourage sales, they also eat into profits.
During a conference call, Gary Dilts, senior vice president of Chrysler Group sales, boasted about the 300's performance -- saying it was capturing the attention of everyone from urban youth to senior citizens. But he was modest about the company's overall performance, saying "we're relatively pleased."
In all, Chrysler Group sales were up 13.5 percent for the Chrysler brand, up 3.6 percent for Dodge and down 1.1 percent for Jeep.
Despite DaimlerChrysler's strong performance, a handful of other automakers achieved better results, including Kia Motors Corp., which rose 36.1 percent, Suzuki Motor Corp., whose sales rose 19.6 percent, and Hyundai Motor Co., which posted an 18.8-percent gain.
Overall, industry sales of light trucks were down 1.0 percent in June compared to a year ago, and down 3.0 percent for cars. Year-to-date, however, truck sales remain up 5.8 percent, while car sales are down 1.7 percent.
There seemed to be little consensus on the reasons for June's overall decline in vehicle sales, especially with the economy on the mend and gas prices moderating. Several automakers blamed surprisingly robust sales in May, which they said may have drained June demand.
While Ford's results were disappointing, George Pipas, Ford's U.S. sales analysis manager, said the performance was pretty much what the company expected. Ford has an aging lineup and plans to unveil several important models, like the Mustang and Five Hundred, later this year.
Every Ford division posted declines for the month, except Mercury, which was up 2.4 percent from June 2003.
"We certainly expected this period to be a tough one for us," said Pipas, who also predicted a tougher few months lie ahead.
At GM, which has four new minivans and other vehicles in the pipeline, Paul Ballew, executive director of global market and industry analysis, characterized the month as "a bit disappointing . . . in relationship to the expectations heading into the month."
Only GM's Cadillac and Saab divisions reported gains for the month, of 14.0 percent and 3.2 percent, respectively, compared with June of last year.
Last month's lackluster performance leaves several automakers, especially GM and Ford, with a glut of inventory that should drive up incentives this summer.
"Incentives will be increased in July and August," the auto dealer association's Taylor predicted.
Late Thursday, Ford announced that anyone purchasing an F-150 through Ford Credit before Tuesday is eligible for an extra $1,000. The automaker also plans to unveil another incentive program Wednesday.
Several automakers and analysts said the industry is still on track for a strong year, with projected sales between 16.7 million and 17 million cars and light trucks.