November 2005 Car Sales ; US Makers Lose ' Asian Makers Win

DETROIT December 1, 2005; Jui Chakravorty writing for Reuters reported that Detroit's Big Three automakers all posted a slide in U.S. vehicle sales in November, losing further market share to major Japanese rivals.

General Motors Corp., the world's largest automaker, on Thursday posted an 11-percent drop in November U.S. sales, its fourth consecutive monthly decline. Ford Motor Co. said sales fell for the third straight month, down 18 percent.

"I think Ford saw catastrophic declines in big SUVs due to a general retreat from that sector because of gasoline prices," Burnham Securities analyst David Healy said.

Both automakers launched new incentive plans in mid-November as demand for their big sport utility vehicles continued to slump.

GM and Ford both cut fourth-quarter production forecasts, but GM said it would raise its first-quarter production target by 6 percent compared with year-ago levels. Ford said it would cut first-quarter production by 2.5 percent.

Shares of GM rose 3 percent after the company's announcement.

Production levels are closely-watched because U.S. automakers book profits on vehicles when they are shipped from assembly plants, not when they are sold at dealer lots.

DaimlerChrysler AG's Chrysler Group said U.S. November sales fell 7 percent, ending 19 consecutive months of year-over-year gains.

In contrast, Japan's Toyota Motor Corp. and Honda Motor Co. Ltd. posted monthly sales gains for November of 5.6 percent and 6.4 percent, respectively.

Nissan Motor Co. Ltd. said U.S. sales slipped 7.8 percent, its second consecutive monthly decline.

PRODUCTION PLANS

GM plans to produce 1.28 million vehicles in the fourth quarter of 2005, down from an earlier forecast of 1.3 million.

The automaker, which has lost nearly $4 billion this year, last week said it would cut 30,000 jobs through 2008 and close a dozen plants in North America to bring capacity in line with demand.

But GM on Thursday set its production target at 1.25 million vehicles for the first quarter of 2006, up from 1.18 million units a year earlier. A company spokesman said the planned cuts will not impact production in coming months.

"The announced cuts will affect production minimally, if at all, in the first quarter of next year," said the spokesman, Daniel Flores.

Ford cut its fourth-quarter production target by 20,000 units to 790,000 vehicles. For the first quarter of 2006, Ford plans to build 885,000 vehicles, down from the 908,000 units it produced a year earlier.

Industry-wide vehicle sales weakened in November to a seasonally adjusted annual rate of 15.7 million units from 16.6 million a year earlier.

INCENTIVES AND MORE INCENTIVES

November U.S. sales results were more bad news for U.S. automakers, who were already dealing with high labor and health-care costs, rising prices for transportation and raw materials and intense competition from Asian companies.

GM's U.S. market share in November fell 1.2 percentage points to 23.8 percent, while Ford's slipped 2.5 points to 17.2 percent.

Japanese rival Toyota, however, gained 1.7 points, bringing its November U.S. share to 14.6 percent. Honda gained 1.1 points at 9.1 percent.

Analysts have said that highly publicized summer incentives by the domestic automakers, including discounts used to clear out 2005 models, pulled many potential buyers into the market earlier than they might have been otherwise, creating a "pull-ahead" effect that caused slower sales in later months.

Some analysts said last week that November got off to a slow start and predicted that Detroit's long-running price war, which has eroded profits, would heat up in coming weeks. In mid-November, the domestic automakers sweetened consumer incentives to attract shoppers.

GM earlier this month launched a "Red Tag" sale, in which anyone in the United States could buy a vehicle for the price paid by its auto parts suppliers' employees. Combined with existing rebates, the program offered a discount of more than $10,000 on some of GM's largest SUVs, a greater savings than the automaker's summer sales incentives.

Chrysler offered customers two years of free gasoline, worth close to $2,400. Ford responded with a program offering reduced prices and rebates.

But incentives may not counteract uncertainty over jobs and the economy, which some analysts have said may also be dragging sales down. And a recent easing of gasoline prices has not reversed a shift in U.S. consumer sentiment away from fuel-thirsty SUVs and pickups.

Truck sales at Ford fell nearly 18 percent, with some of its largest SUVs such as the Expedition falling nearly 44 percent in November. Sales of Ford's popular Explorer model plunged 52 percent.