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GM Sales Stall in November


Lack of 2007 inventory led to lower sales for General Motors, but Ford remained flat and Toyota once again increased slightly

High gas prices, shaky consumer confidence, and a continuing slump in sales for the Detroit Three mean that U.S. auto sales in 2008 could fall below 16 million units for the first time in a decade.

For the month of November, U.S. industry sales were down 1.6% from the year-ago month to 1,179,848, according to Woodcliff Lake (N.J.)-based AutoData. Through 11 months, 2007 sales were off 2.4% from the year-ago period, to 14,759,122, AutoData said. Analysts expect 2007 sales of just over 16 million.

"All of us are operating in a challenging business environment," said George Pipas, U.S. sales analysis manager for Ford Motor (F), in a Dec. 3 conference call.

Record Numbers

Toyota Motor (TM) continues to buck the trend, if just barely, with record November sales. Its U.S. sales were up 0.3% for the month, to 197,189, AutoData said.

But in the current market, even mighty Toyota has resorted to offering 0% financing for up to 60 months, to clear out leftover 2007 Tundra full-size pickups (BusinessWeek.com, 1/30/07). The company said that about 25% of its Tundra inventory consists of 2007 models, which it said is an acceptable level for this time of year.

Sales also increased for Honda Motor (HMC) and Nissan Motor (NSANY), AutoData said.

Meanwhile, Chrysler's November sales were down 2.1% to 161,088; year-to-date sales were off 3.4% to 1,885,227, AutoData said.

Low Levels

Tough sledding for the Detroit Three is expected to continue in 2008.

Ford expects U.S. auto sales for the first half of 2008 at a seasonally adjusted annual sales rate of 15.2 million to 15.7 million, Pipas said. For a full year, that would be the lowest level since 1998. Pipas declined to make a full-year 2008 forecast, other than to say Ford expects some improvement in the second half.

Surprisingly, Ford announced Dec. 3 that its sales were up slightly from the year-ago month—an increase of 0.4%, to 182,951 for November. However, Ford sales were down 12.1% year-to-date vs. the year-ago period, to 2,360,505 cars and light trucks. Ford's November increase came largely from new crossover models that combine a car-like ride with truck-like utility, such as the 2008 Ford Edge.

Fleeting Sales

Ford and General Motors (GM) were on a seesaw in November—both companies cited fleet sales as a factor in their monthly numbers. According to AutoData, GM sales fell 11% from the year-ago month, to 261,273 in November, and year to date, GM was off 6.1%, to 3,502,775. Ford's Pipas said that for the first time in 2007 Ford had a slight increase in sales to fleets, after cutting them back all year. He said Ford's fleet sales were down 143,000 units through 11 months, but up 6,000 units in November.

Sales to daily rental fleets are generally assumed to be unprofitable while sales to commercial and government fleets are usually profitable, but not as profitable as retail sales. Year to date, about 30% of Ford sales were fleet sales, Pipas said.

General Motors said that besides lower fleet sales, its November sales were off in part because it ran short of leftover 2007 models carrying heavy discounts, especially full-size pickups and SUVs. "That hurt us a little bit this month," says Mike DiGiovanni, GM executive director, global market and industry analysis.

"The good news is that sets us up well for 2008," says GM's Mark LaNeve, North America vice-president, vehicle sales, service, and marketing.

Jim Henry is a reporter covering the automotive industry and automotive trends in BusinessWeek's New York office.

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