Detroit 3 see auto sales drop by more than 10%

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Detroit’s Big Three auto makers — Ford, Chrysler and GM — each saw U.S. sales of their vehicles decline by more than 10 percent in June, compared to May, in a sign that the economic recovery remains fragile.

These automakers verified the analysts who had projected a decrease in sales because of consumers’ hesitation to purchase cars in an environment of high unemployment.

“The drop-off is fundamental of economic recovery,” said Anthony Pratt, an industry analyst at Autofacts, a site affiliated with PriceWaterhouseCoopers. “We may not be entirely thorough the woods yet in terms of the recession.”

In reports released Thursday, Ford Motor Co. and General Motors Corp. both said their U.S. sales fell 13 percent in June, a telling indication that the industry couldn’t maintain the slow increases of previous months. Similarly, Chrysler LLC fell by nearly 12 percent.

The poor June figures were not unexpected and Mr. Pratt said 2010 is still likely to be an improvement over 2009 — with the total number of cars and trucks sold projected at around 11.6 million, an improvement over last year’s 10.4 million.

“Year over year numbers should increase from last year, but we’re not going to see a rapid growth,” Mr. Pratt said. “It’s a long process to recovery.”

Three of Japan’s major players in the industry also suffered sales losses — Toyota Motor Co.’s June sales were down 14 percent over May, Honda’s and Subaru’s numbers each slipped 9 percent.

South Korea’s Hyundai Motor Corp. was the only big automaker to post an increase in June, a 4 percent rise over May.

Amid the poor month to month numbers, the three brands still saw signs of hope in its results.

Ford, Lincoln and Mercury totaled 954,745 units sold in first half sales, which is an increase of 28 percent from last year’s results. June sales saw 170,900 units sold, up 15 percent from June 2009.

“New products continue to drive Ford’s success,” said Ken Czubay, Ford vice president, U.S. Marketing, Sales and Service. “Ford and its dealers continue to offer customers the strongest value proposition: leading fuel economy, quality and resale value on a wide range of vehicles. That’s why our business is growing.”

Likewise, sales reported for the GM’s four core brands — Chevrolet, Buick, GMC and Cadillac — rose 36 percent over June 2009, helped by a strong increase in demand for crossover vehicles and a mild recovery in sales of pickup trucks. Ford’s pickup truck demand was equally strong, with sales of the new Super Duty increased by 58 percent over last June. Chrysler saw an upsurge of demand in the Wrangler and Dodge markets.

“As companies continue to invest in their businesses, we expect this segment to continue to recover,” said Don Johnson, vice president of GM’s U.S. sales operations. “We think the release of some pent-up demand in the pickup market is an indication that a fundamental part of the U.S. economy is gradually strengthening.”

However, the June 2009 figures reflect the depths of one of the worst recessions in recent history.

Even before the numbers were released, Detroit analysts were playing down expectations for the June numbers, generally predicting overall sales for the industry to drop by 10 percent or more from May 2010.

“The recovery from such a severe global recession as we experienced is never easy and it is never linear. We don’t expect every month to be stronger than the last. Will June measure up to May? Probably not. Is that cause for concern? Not in the least,” George Pipas, the U.S. sales analyst for Ford Motor Co., told The Washington Times on Tuesday.

Mr. Pipas said automakers don’t put too much stock in month-to-month fluctuations, instead looking at quarterly numbers.

“You can count on me to keep the cork in the champagne bottle if July’s sales rate is higher than June,” he said.

© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.

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