General Motors, Ford Motor Co. Post Large Sales Drops in June, Losing Business to Foreign Rivals

DETROIT July 2, 2004; John porretto writing for the AP reported that General Motors Corp. and Ford Motor Co. took the hardest hits as demand for new cars and trucks fell more sharply than expected in June, but most industry observers say an improving economy should spur business for the rest of the summer.

"There's no doubt higher gasoline prices over the last few months have temporarily affected retail spending," said Jim Press, executive vice president of Toyota Motor Corp.'s U.S. arm. "However, we're already seeing a rise in consumer confidence and a softening of fuel prices. The combination should result in an upswing in industry sales this summer."

GM and Ford, the nation's two largest automakers, both posted unexpectedly large double-digit sales declines last month and continued to lose business to foreign rivals.

But DaimlerChrysler AG's Chrysler Group, the No. 3 U.S. automaker, rode strong demand for its new Chrysler 300 flagship sedan to a 5.5 percent increase in car sales and a 1 percent overall gain.

Among foreign brands posting higher year-over-year results were Toyota Motor Sales USA, American Honda Motor Co., Nissan North America, Hyundai Motor America, Kia Motors America and BMW.

Toyota, the No. 1 Japanese automaker and No. 4 behind GM, Ford and Chrysler in U.S. sales, ended its best-ever six months of sales in 47 years of business in the United States. The automaker sold 1,004,636 new cars and trucks in the United States through June, when sales were up 5 percent. Chrysler sold 1,135,898 vehicles during the same period.

June's seasonally adjusted annual sales rate, or SAAR, was 15.4 million units, compared with 16.5 million a year ago and 17.8 million in May. The rate indicates what sales would be for the full year if they remained at the same pace for all 12 months. Full-year sales for 2003 were 16.7 million.

Analysts predicted overall June results would be lower than a year ago and down significantly from May's torrid selling pace, but no one expected the pace to fall off as drastically as it did.

Still, industry executives remained fairly upbeat about prospects for the next few months. At least a couple said they don't expect slowly rising interest rates to have a big effect on business.

"Everyone's been talking about it for probably six months, and rates are still at historically low levels," said Jed Connelly, senior vice president for sales and marketing at Nissan's North American affiliate, where sales climbed 9 percent in June.

Kia was up 31 percent in June, Hyundai 14 percent, BMW 8 percent and Honda 1 percent.

Percentages are adjusted and based on the daily sales rate; there were 25 selling days last month and 24 in June 2003.

Market share for Detroit's Big Three was 58.5 percent in June, down from 61.6 a year ago, according to Autodata Corp. At the same time Asian automakers grew their U.S. share to 34.5 percent in June from 31.3 a year ago.

GM officials said earlier this week that June results were shaping up to be below expectations, though its 15.6 percent drop from a year ago was larger than observers predicted. Car sales at the world's largest automaker were down 15 percent, while truck sales fell 16 percent.

Sales of Ford's domestic brands were off 11.5 percent in June as an aging car lineup hurt business. Sales of Ford, Lincoln and Mercury cars were off 20.5 percent last month, while truck sales were down nearly 7 percent.

Ford is experiencing a lull in car sales as it prepares for the launch of new models such as the Ford Five-Hundred sedan and redesigned Mustang later this year. June marked the fourth time this year that Ford's overall sales were below year-ago results.