Auto Bailout

Car Sales: Signs of Hope Amid April's Wreckage


April was a pileup for the auto industry, what with Chrysler's bankruptcy, General Motors' (GM) fight to avoid the same fate, and overall U.S. sales that plunged 34% from a year ago. But there were pockets of good news: Ford Motor's (F) sales topped Toyota's (TM) for the first time in a year. The Dearborn (Mich.) carmaker posted its fifth gain in retail market share over the past six months. And even Chrysler suffered only marginally worse than the industry as a whole after spending the month on death watch.

All in all, it was enough to have some industry officials talking cautiously about a bottom to their yearlong sales debacle.

"I think the industry is bumping along the bottom of the bathtub," said Chrysler Vice-Chairman James Press.

Chrysler sales were down 48% on the whole in April. But a big part of that reflected a drop in orders from rental car agencies—sales that are much less profitable than retail sales at car dealerships. Chrysler's retail sales last month fell 37%. Press expressed hope that the public will view President Barack Obama's pledge of new taxpayer loans to assist a merger between Chrysler and Italian automaker Fiat (FIA.MI)—plus government guarantees for vehicle warranties—as a new start for the company.

GM's Turn to Cajole Bondholders

Ford sales were down 31% in April, to 134,000 vehicles. Toyota saw a steeper drop of 42%, to 126,000, allowing Ford to regain its No. 2 position behind GM in total U.S. sales for the first time since early 2008.

GM's sales were down 33% from a year ago—a steep drop, but perhaps not as bad as expected, given the bankruptcy talk that swirled around the automaker. Indeed, GM's sales improved from March. The company must convince its bondholders to take deep discounts on their holdings by June 1 in order to persuade the Treasury Dept. that it should commit more taxpayer loans to keep the automaker in business.

GM sales chief Mark LaNeve said battling the bad news around Detroit and GM itself is not easy. "I've seen everything except that a Martian is going to run General Motors," he said. "We've been fighting every one of these rumors, and I can tell you they don't help sales."

Leading Japanese automakers actually fared a bit worse than Detroit in April. Aside from Toyota, Nissan (NSANY) was down 37%. Honda (HMC), however, turned in a decline of merely 25%.

Vehicle Incentives Averaged $3,031

Honda raised incentive spending on its Accord sedan in April, helping the Accord top the Ford F-Series pickup and Toyota Camry as the best-selling model in the U.S. for the month. South Korea's Hyundai Motor posted the smallest decline among major automakers, sliding 14%. Hyundai surpassed Nissan in sales for only the second time in history, according to automotive researcher Edmunds.com of Santa Monica, Calif. Kia Motors, Hyundai's affiliate, reported a 15% decrease.

Automakers spent a hefty $3,031 in incentives for the average vehicle sold, up 29% from a year earlier, according to Edmunds.com. Still, that was down from the record of $3,165 in March.

Industry executives hope that a bounceback in the stock market, improvements in consumer confidence reported in April, and the gradual loosening of credit to car buyers will add up to a small comeback in sales in the second half of the year.

The pain continued to be felt across luxury car sales, as well. Mercedes-Benz (DAI) was down 29% and BMW was down 32%.

Kiley is a senior correspondent in BusinessWeek's Detroit bureau.

David Kiley is a freelance writer based in Ann Arbor, Mich.

Race, Class, and the Future of Ferguson
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus