Lifestyle

Honda Is June's Only Sales Winner


Honda eked out a slim 1.1% sales increase for June, but for the rest of the auto industry there was nothing but bad news

At a time when used pickups and SUVs are gathering dust along country roads with "For Sale" signs in their windows, and a gallon of gasoline costs more than $4, did anyone out there seriously June would be anything but horrible for auto sales?

Despite slash-and-burn promotions, U.S. light-vehicle sales last month were down 18.3% from 2007, to 1,189,108. For the first half, sales were down 10.1%, to 7,411,682, according to Woodcliff Lake (N.J.)-based AutoData. Industry forecasters said that puts auto sales on track for full-year 2008 sales of around 14.5 million, which would be the worst finish in 15 years.

Some Good, Mostly Bad News

There was one, albeit slim, ray of hope. Honda Motor (HMC), which includes Honda and Acura, scratched out a meager 1.1% sales improvement, to a June record 142,539. Sales of its tiny Fit model more than doubled, to 10,003 for the month, the company said. Sales of its popular Accord were also strong, posting a 9% gain over June 2007. Like every other maker, its pickups tanked, with sales of the Ridgeline plummeting 41.5% for the month. Nevertheless, for the first half, Honda was up 4.1%, to 798,358.

Following the trend this year, sales of traditional full-size pickups and SUVs are off the most, in favor of more fuel-efficient small cars. But most troubling of all for the industry are the customers who simply aren't buying anything, despite rising discounts.

"If the overall market is 14 million, that's 3 million less than it was just a couple of years ago. That's going to put pressure on every segment of the market, not just trucks," says Mark LaNeve, vice-president, General Motors North America vehicle sales, service, and marketing.

U.S. light-truck sales dropped 28.4% in June, to 528,060, AutoData said. Car sales were down 7.9% from the year-ago month, to 661,048.

Special Offers Fall Flat

General Motors' (GM) sales fell 18.2% in June from the year-ago month, to 262,329. GM results would have been even worse had it not been for the company's "72-hour sale" in the last few days of the month, offering 0% financing for up to 72 months, to get an early start on clearing out 2008 models.

The company has extended the sale through the long July 4 weekend. "The older models are not going to get any prettier or less expensive as the summer moves on," LaNeve says. "Right now is the best time to move them. Every day that goes by, theoretically, it gets more expensive to move them," with discounts, he says. LaNeve says the 72-month financing wasn't as expensive as it looked—because GM was already offering up to 60 months of 0% financing on many of the same models.

Ford Motor (F) sales fell 27.8%, to 173,462. That was despite a "You Pay What We Pay" promotion on the 2008 F-150 pickup, to make way for a redesigned 2009 model. Even with the promotion, sales of the F-Series pickup fell 40.5% in June, to 38,789, Ford said. Last month, Ford signaled its desperation by postponing the debut of the 2009 F-150 for two months, to allow more time to sell off the leftover 2008s.

Chrysler's sales plunged 35.9% in June, to 117,457. Its "$2.99 Gas" promotion, where consumers get a card that entitles them to buy gas at that price for up to three years, no matter how high the price at the pump gets, seems to be a bust. Chrysler extended the deal, which was supposed to expire July 7, through the end of July, and also sweetened it by offering both cash incentives and the gas card. Initially, consumers could have one or the other, but not both.

According to Plan?

Nevertheless, Jim Press, Chrysler president and vice-chairman, continued to insist that wholesale shipments to dealers are going according to plan, and that lower sales to daily rental fleets accounted for much of the drop in sales at Chrysler.

The Detroit Three aren't the only ones in a tailspin. Nissan Motor (NSANY) sales fell 17.7% in June, to 75,847. Even mighty Toyota Motor (TM) is feeling the pain, with June sales down 21.4%, to 193,234.

Jim Lentz, president of Toyota Motor Sales USA, offered what passes for an optimistic forecast in the present environment—namely, that this year will be the bottom of the current auto industry cycle. "We feel 2008 is going to be the bottom, 2009 will see a modest recovery, and for 2010 and beyond will be a recovery beyond where it was in 2006-2007. The long-term fundamentals still look very strong. We just need to get past this dip," he says.

Fortunately for Toyota, its lineup remains in relatively good shape, especially in comparison with its American rivals. For Detroit, however, that dip looks more like a chasm all the time.


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