Auto Sales in U.S. Fall in November Despite Lower Gas Prices, Deep Discounts From Automakers

DETROIT Dee-Ann Durbin writing for the AP reportesd that customers avoided car showrooms in November, despite lower gas prices and deep discounts, handing domestic and foreign automakers a disappointing month.

The Big Three -- General Motors, Ford, and Chrysler -- reported lower November sales on Thursday, and even Toyota, which had gotten used to double-digit sales growth, only had modest gains.

Sales of sport utility vehicles slid again as consumers showed a growing preference for cars and car-based crossover utilities.

A new round of discounts from U.S. automakers introduced in mid-November failed to overcome buyers' worries about high heating costs and other factors. And automakers said they're still suffering payback from a summer of popular discounts which allowed customers to snatch up vehicles for the employee price.

Paul Ballew, General Motors Corp.'s executive director of market and industry analysis, said the world's largest automaker had its highest monthly sales ever in July, so that was bound to affect the rest of the year.

"We just have to find the right balance again between the strength we saw this summer ... and now what we're seeing as a bit of weakness in the industry," Ballew said.

Automakers said the results were a positive sign after sales plummeted in October, however, adding that they're expecting even stronger sales in December as the industry gets further away from the huge sales surge this summer.

In a show of confidence about its new line of SUVs coming this January, GM raised its first-quarter production forecast. GM plans to produce 1.25 million vehicles in North America in the first quarter, up 6 percent from a year ago.

Ford Motor Co. was less optimistic, saying it plans to build 850,000 vehicles in North America in the first quarter, down 2.5 percent from a year ago. That's still a higher output than some analysts had forecast. Ford said it will be increasing car production and lowering its output of trucks and SUVs. Chrysler didn't reveal its production plans.

GM's sales tumbled 11.3 percent last month compared to last November, led by a 16.7 percent decrease in sales of trucks and SUVs. Car sales slid 3 percent. GM's sales fell 3 percent in the first 11 months of the year.

Ford said sales of its Ford, Lincoln and Mercury brands fell 18 percent. Car sales slid 6 percent despite strong demand for the company's new Ford Fusion, Mercury Milan and Lincoln Zephyr sedans and a 46 percent increase in sales of the Ford Freestyle crossover. Sales of Ford trucks and sport utility vehicles slipped 22 percent, led by a 52 percent decline in sales of the newly redesigned Ford Explorer SUV.

Ford's U.S. sales analysis manager, George Pipas, said payback from summer discounts is still having some effect on truck and SUV sales, but a trend toward smaller vehicles also is taking hold. Cars are on pace to outperform sales of trucks and SUVs this year for the first time since 1981, he said.

Pipas said high gas prices after the hurricanes this fall accelerated that trend. He predicted SUV sales will stabilize if gas prices remain around $2 a gallon, however.

Ballew said GM doesn't think the drop in Ford Explorer sales indicates a trend that should worry GM. He said customers in the mid-size SUV segment tend to be less loyal than those in other segments and they're choosing between a lot more competitors than when the Explorer was introduced 15 years ago.

"It's just a very tough operating environment for those products," Ballew said.

DaimlerChrysler AG's Chrysler Group reported a 7 percent decline, with a 10 percent increase in car sales offset by an 11 percent decrease in truck and SUV sales. Chrysler's sales were up 6.5 percent for the year.

Toyota's car sales were up 9.3 percent for the month, led by huge increases in sales of its Lexus luxury sedans, but sales of trucks and SUVs were up just 1 percent for an overall sales increase of 5.5 percent. The Japanese automaker's sales were up 11 percent for the January-November period.

Jim Press, president and chief operating officer of Toyota Motor Sales USA Inc., said sales should pick up through the end of the year as consumer confidence grows stronger. Toyota, the world's second largest automaker, also is offering some holiday discounts.

Honda's sales gained 6 percent for the month, led by a 9.5 percent increase in truck and SUV sales as the automaker's new Ridgeline pickup continued to gain traction. Honda's sales rose 7 percent for the first 11 months of the year.

Nissan Motor Co. took a bigger hit in truck sales, with sales of its Titan pickup down 30 percent. Nissan sales slipped 7.7 percent for the month, but increased 11.4 percent overall for the first 11 months of the year.

Hyundai Motor Co. also reported a 22 percent decline in SUV and truck sales, but a 23 percent increase in car sales for a 7.9 percent increase for the month. Hyundai sales rose 9 percent for the year.

GM introduced its "Red Tag" discount in mid-November after a 23 percent drop in sales in October, when it ended its summer discounts. Ford matched GM a day later. Chrysler followed with a program that gives customers debit cards for $2,400, two years of free scheduled maintenance and an increased warranty.

Pipas said customers responded less enthusiastically to the discounts than automakers expected, but sales will probably pick up in December. The Big Three said Thursday they have no plans to enhance their discounts this month.

"My experience says it takes a week for dealers and customers to get the message," Pipas said. "There is certainly a lag effect when you announce one of these programs."

Sales percentages were adjusted for differences in the number of selling days. There were 25 selling days in November 2005 and 24 in November 2004.