U.S, Automakers Post Weak Sales

DETROIT May 1, 2003; Michael Ellis writing for Reuters reporterd that foreign automakers, boosted by new models, mostly reported flat to stronger U.S. sales for April on Thursday, but a sharp drop in results from Detroit's Big Three dragged the industry's totals down.

Honda Motor Co. Ltd. said its U.S. car and truck sales jumped 11.2 percent, powered by the 55 percent surge in its sales of its sport utility vehicles and minivans, including its new Element small SUV.

"We're reaping the rewards of the most ambitious product offensive in our history with six all-new models in the past 13 months," Dick Colliver, executive vice president of American Honda said in a release.

With many automakers reporting results, industry officials said that they expect sales for April to run at a seasonally adjusted annual rate of around 16.5 million light vehicles, up from a low of 15.3 million in February, but down from the 17.2 million rate of April last year.

That would be slightly weaker than the 16.7 million rate that many analysts had forecast. All sales results are adjusted to reflect the extra selling day in April versus last year.

Sweden's Saab, a unit of GM, posted its best sales results ever, and South Korea's Hyundai Motor Co. Ltd. had its best April in history. Germany's BMW AG, Japan's Subaru , and Britain's Land Rover, a unit of Ford, also had higher sales.

April proved to be no exception to the rule that when the import automakers push into new segments, particularly the fast-growing SUV market, they take market share from the domestic Big Three.

The end of fighting in the Iraq war, a rebound in consumer confidence, low interest rates and high incentives all helped U.S. auto sales spring back from the winter blahs.

DOMESTIC DESPAIR

General Motors Corp.'s sales excluding Saab fell 8.9 percent despite what it described as its most aggressive incentive program ever. Earlier, GM extended its incentive program across most of its lineup, offering zero percent interest financing for loans of up to five years.

GM's incentives helped the automaker boost its U.S. market share the past two years. But in recent months, the world's largest automaker has lost share. Should GM post another drop in April, the automaker will have lost U.S. market share in seven of the last eight months.

GM warned last month that it may not reach its earnings target this year because of incentive costs and the wobbly U.S. economic recovery.

GM shares were down 78 cents or more than two percent at $35.25 on the New York Stock Exchange in afternoon trade. Ford shares fell 34 cents or 3.3 percent to $9.96 on the NYSE.

"Our portfolio is not as competitive across the board as we'd like it to be," said GM's Paul Ballew, executive director of market and industry analysis. "Given the age of our lineup we're going to struggle this year in cars until we're able to execute our (new vehicle) launches."

CASH COW

Ford's sales of its domestic brands -- the Ford, Lincoln and Mercury divisions -- dropped 6.9 percent to 279,933 vehicles.

"I would say the current weakness we are seeing in the economy -- I liken it to a newborn calf. It's up but a little wobbly at this point," George Pipas, Ford's manager for sales analysis, told reporters and analysts in a conference call.

Sales of Ford's Mustang sports coupe surged about 30 percent after the automaker offered $5-a-day leases on its entry-level Mustang and Ford Ranger pickup trucks in April. Ranger sales, however, fell in April. Earlier this week, Ford extended the $5-a-day lease through June 6.

Chrysler, the U.S. arm of DaimlerChrysler AG said that its U.S. sales fell 10.2 percent in April to 187,086 cars and trucks.

A few import brands also reported weaker results, including Ford's Jaguar, which posted a 33 percent drop, and Volkswagen AG, whose sales fell to 25,412 units from 30,216 units previously.