- The Washington Times - Thursday, July 1, 2010

Detroit’s Big Three automakers all saw U.S. sales of their vehicles decline by 12 percent or more in June, compared with May, and Toyota did even worse - a sign that the auto industry and the general economy remain fragile.

The automakers’ reports verified predictions of 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 fundamentally the result of” a weak 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. Industrywide, sales were off 10 percent versus May’s numbers.

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 big automakers also suffered significant sales losses - Toyota Motor Co.’s June sales were down 14 percent over May, while Honda’s and Subaru’s numbers each slipped 9 percent. South Korea’s Hyundai Motor Corp. was the only major market player to post an increase in June, a 4 percent rise over May.

Typically auto sales are lower in June than in May, but auto industry analysts say 4 percent to 5 percent losses being more typical. And the past six months have seen three rises and three declines in month-to-month sales.

The auto numbers were not the only bad economic news to come down the pike Thursday. Various economic reports released by the government showed that:

c The rolling four-week average number of new claims for jobless benefits rose to its highest point since March.

c Home sales continued to plummet, with the National Association of Realtors saying contracts to purchase homes fell by 30 percent in May, partly because government homebuying incentives expired.

c Manufacturing growth continued but at a slower pace, with the Institute for Supply Management’s manufacturing index slipping in June.

c The Dow Jones Industrial Average lost ground the sixth straight trading day, albeit a modest 41 points.

Amid the poor month-to-month auto numbers, the three U.S. brands still saw signs of hope in Thursday’s results.

Ford, Lincoln and Mercury totaled 954,745 units sold in the first half of the year, 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 for 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 also saw an upsurge of demand in its truck divisions.

“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, saying there was “some pent-up demand in the pickup market.”

However, the June 2009 figures, over which the June 2010 figures improved, reflected the depths of one of the worst recessions in recent history and uncertainty over the futures of bankrupt GM and Chrysler.

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