General Motors Corp and Ford Motor Co posted double-digit declines in US vehicle sales on Wednesday as uncertain economic conditions undercut a renewed incentives push by Detroit automakers and deepened an industry slowdown. ( Reuters )
GM's August sales tumbled 20.4 percent while Ford's sales fell 26.6 percent, forcing the automakers to announce steep second-half production cuts, likely putting a drag on their financial results.
Signaling more weakness in the months ahead, the No. 2 US-based automaker said it expected the second half of 2008 to be more challenging than the first half.
Toyota's sales fell 9.4 percent while Nissan Motor Co Ltd surprised investors with a 13.6 percent increase in August sales.
The sales trends in August reflected the continued shift toward smaller, more economical passenger cars and away from large pickup trucks and sport utility vehicles.
US demand for vehicles this year is expected to drop to near-decade lows, hurt by high gasoline prices, a housing market slump and tighter credit.
Ford now estimates 2008 US auto industry sales to come in at the low end of its previous range of 14 million to 14.5 million units.
"We expect the second half of 2008 will be more challenging than the first half, as weak economic conditions and the consumer credit crunch continues," said Jim Farley, Ford group vice president of marketing.
Auto sales are a closely watched and early key indicator of consumer demand in the United States for big-ticket items, with investors focused on whether second-quarter economic growth will be sustained through the rest of 2008.
Overall for August, analysts expect US auto sales to be down from 14 percent to 19 percent industrywide compared with a year ago, but up slightly from the 16-year low reported in July.
Ford estimates that the US seasonally adjusted annual rate of industry sales, a key figure, will come in at about 14.1 million units including medium- and heavy-duty trucks.
Chrysler LLC was expected to post double-digit declines in US auto sales when it reports sales later on Wednesday, according to analysts.
To boost sagging sales and clear out inventory, No. 1 US automaker GM extended its employee-level pricing discount program by one month through the end of September and increased the number of 2009 model year vehicles carrying the offer.
GM, which has seen US sales fall 18 percent through July, is under pressure to cut costs amid signs that industry sales were slack despite easing gasoline prices and aggressive incentives.
GM President and Chief Operating Officer Fritz Henderson told reporters in India on Tuesday that August was "another fairly tough month" and the automaker is not optimistic for the rest of 2008.
Overall, automakers increased their sales incentives about 7 percent in August from a year earlier, to an average of $2,642 per vehicle, according to Edmunds, which tracks auto sales trends. That figure is heavily weighted toward large trucks.
Year over year, Chrysler led major automakers in incentives with an average of $4,366 per vehicle followed by Ford with $3,443 on average per vehicle. Incentives at all the other automakers also rose in August, according to Edmunds.