DodgeIntrepid.Net Forums banner

1 - 4 of 4 Posts

·
Registered
Joined
·
3,652 Posts
Discussion Starter #1
From the Detroit Free Press:

GM auto sales fall sharply

Figures decline 14.4% in March; incentives are lower

April 4, 2006

BY SARAH A. WEBSTER

FREE PRESS BUSINESS WRITER

General Motors Corp., in the midst of an aggressive turnaround campaign, posted a larger-than-expected sales decline in March, causing the automaker to lose nearly two percentage points of market share through the first three months of the year.

Nearly every percentage point of market share represents about 170,000 new vehicles annually, or enough to keep one assembly plant in operation.

While there were some positive signs in GM's numbers -- the automaker is getting consumers to pay more for its vehicles, and its newest vehicles, such as the Chevrolet Tahoe and Buick Lucerne, are selling well -- the overall results looked harsh.

GM's sales were off 14.4% in March.

For the year to date, consumers bought more than 50,000 fewer GM cars and trucks than they did a year ago. That's a year-to-date sales decline of 5.2%, which is far worse than the overall industry performance, and GM's market share fell to 24.1%.

So far this year, sales of new cars and trucks in the United States are up 1.1%.

Meanwhile, Auburn Hills-based Chrysler Group was the only Detroit-area automaker to outperform the market, with a year-to-date sales gain of 2.8%. The strong performance helped its owner, DaimlerChrysler AG, post an impressive 2.9% sales gain for March and 3.9% for the quarter. DaimlerChrysler now sells 15.6% of the new cars and trucks sold in the United States.

Ford Motor Co. posted a sales decline of 4.7% for March and 2.8% for the year, causing the company's market share to fall to 18.7% from 19.5% during the same period a year ago.

"GM has had a poor month," said Paul Taylor, chief economist for the National Automobile Dealers Association in McLean, Va., an association with more than 22,000 members. "It's bound to be disappointing."

Paul Ballew, GM's executive director of global market and industry analysis, said during a conference call with journalists that GM knew it would be a challenging year.

But he pointed to positive signs in GM's numbers. For example, he said the company's new strategy to cut the sticker price on vehicles has lowered GM's incentive spending by $1,500 a vehicle and consumers are actually paying more, on average, for GM cars and trucks.

So while GM is under a lot of pressure from competitors to offer bigger discounts, GM Chairman and CEO Rick Wagoner said in a news conference on Monday that the company is going to hold fast to its strategy.

"We are going to have to put on our helmets, and we're going to have to take a few months of lower overall sales," Wagoner said.

Ballew said aggressive incentives from competitors, especially Chrysler, is straining GM.

Incentive spending is an important piece of the puzzle in evaluating how strong consumer demand is for a company's vehicles and how the automaker's financial performance might change in the future, since cash-back rebates, financing bonuses and other promotions eat into revenue.

According to several sources, Chrysler is now the top incentive spender among major manufacturers. Automakers do not publicly release how much they spend on incentives, so several firms estimate their spending with data from dealers and other sources.

According to the consumer Web site www.Edmunds.com, Chrysler spent $4,005 per vehicle sold on incentives, more than any other manufacturer. The research firm Autodata Corp. estimates Chrysler's incentive spending is also leading the industry, at $3,864 per vehicle.

On Monday, Chrysler also said it would launch a new incentive program, which will offer consumers rebates from $1,000 to $4,000 on most of its models, excluding the Chrysler 300, Dodge Magnum, Dodge Charger and some special performance vehicles such as the Dodge Viper.

Still, Gary Dilts, Chrysler Group's senior vice president of sales, defended the company's incentive spending as stable.

Meanwhile, consumer tastes keep shifting in a way that promises to continue squeezing Detroit.

Cars continue to be more popular than trucks. While car sales were up 2.4% during the first quarter of the year, sales of light trucks -- a category that includes pickups, SUVs, crossovers, and vans -- have flat-lined.

That's largely due to the continued fall of the midsize SUV, a profitable vehicle that has propped up the bottom line of Detroit automakers for years.

SUVs started declining in popularity rapidly during last year's gas price shock, and they continue waning faster than automakers have been expecting, causing financial strain.

"Are sales falling faster than what we thought, from an industry perspective? Yes," Ballew said. "We expected it to be a difficult year, but I would describe the year so far, for all manufacturers, as pretty brutal. It's been a category that has been declining very rapidly."
 
1 - 4 of 4 Posts
Top