Lifestyle

May Auto Sales Look to Another Decline


Analysts forecast another dismal month for Detroit, based largely on dwindling SUV and truck sales

U.S. auto sales probably fell about 7.4% in May, according to a forecast from Edmunds.com. Automakers will report May sales later today.

The Edmunds.com forecast would be roughly in line with deteriorating sales so far this year, especially for large pickups and SUVs, as high gas prices have motivated buyers to switch to smaller cars and crossovers, or sit out entirely.

In related news, at the company's annual shareholders' meeting in Wilmington, Del., General Motors' (GM) chairman and chief executive, G. Richard Wagoner Jr., announced plans to introduce a new line of compacts for North America, while also boosting passenger car production and closing four truck plants in Ohio, Ontario, Wisconsin, and Mexico (BusinessWeek.com, 6/3/08).

Forecasting monthly sales is an ugly business, since sales have gotten worse just about every month so far this year. For all of 2007, U.S. light-vehicle sales, not counting medium and heavy trucks like delivery vans and 18-wheel trailer-trucks, fell only 2.5%, to about 16.1 million. In January, 2008, sales fell 4.3% from the year-ago month. In February, they were down 5.4%; in March, down 8%; and in April, down 7.7%, according to AutoData of Woodcliff Lake, N.J.

Predicting the Worst Numbers in a Decade

Edmunds.com underestimated how far April sales would fall, predicting April, 2008, sales would be only 2.2% behind the year-ago month. Auto analysts have been trimming their full-year 2008 forecasts, as sales have worsened and the Detroit Three have cut back on production, in response to lower demand. Many forecasters are now predicting 2008 sales in the 15-million unit range, the worst in more than a decade.

Small cars, crossovers, and gasoline-electric hybrids are benefiting from the move to more fuel-efficient vehicles. Detroit Three market share has fallen—its model lineups are still heavily tilted toward big pickups and SUVs. Year-to-date through April, market share for the traditional domestic brands had fallen to 49.4% of the U.S. market, down from 52.4% a year ago, AutoData said.

"As a result of high gas prices, compact car and hybrid market share is predicted to reach an all-time high this month," said Jesse Toprak, executive director of industry analysis for Edmunds.com, an auto shopping and consumer information site based in Santa Monica, Calif.

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

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