General Motors Corp. on Tuesday posted a steeper-than-anticipated 24 percent decline in June sales, as U.S. automakers lost share and overall monthly sales sputtered in the face of high fuel prices and a weak housing market.
Shares of GM dropped more than 4 percent after the holiday-shortened close of trade on the New York Stock Exchange in reaction to the monthly sales shortfall and indications the largest U.S. automaker would have to offer bigger discounts.
Sales for GM's Detroit-based rivals also slid for June, while Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. all gained ground after taking the unusual step of increasing spending on showroom discounts.
Ford Motor Co. sales were down 11 percent, while Chrysler's fell 5 percent. Both declines by the loss-making Detroit-based automakers were in line with cautious analyst expectations as the industry closed out a weak second quarter.
Sales for Nissan were up an industry-leading 18 percent. Toyota's sales gained 6 percent; Honda's rose 7 percent.
“The bottom line was that it was a tough quarter and a first half that was weaker than we expected,” said GM sales analyst Paul Ballew.
GM was the only major automaker to throttle back on incentive spending in June compared with May, according to industry-tracking service Edmunds.
Ballew said some of GM's shortfall could be attributed to lost sales in segments like full-size pickup trucks, where Toyota stunned competitors by offering zero-percent financing and cash rebates on its all-new Tundra.
“What we saw in the month was beyond what we could have imagined,” Ballew said, calling Toyota's margin-sacrificing sales strategy “a bit of a curveball.”
Edmunds analyst Jesse Toprak said GM would have to respond with more aggressive discounts of its own in order to avoid a pile-up of inventory in the summer, a time when automakers try to make room for upcoming models.
“This is a bit of a shock and I'm sure it's going to produce some new marketing thinking at GM,” Toprak said.
SMALL IS BEAUTIFUL?
With gasoline prices hovering just below $3 per gallon in the United States, passenger cars and more-fuel-efficient car-based crossover utility vehicles outsold light trucks, a shift that has favored Japanese car makers.
Nissan, for instance, recorded a 76 percent jump in sales of its Altima sedan. Honda saw a 34 percent jump in sales of its competing Civic. Toyota's best-selling passenger car, the Camry, posted an 8 percent sales gain and sales of its hybrid Prius were up 76 percent.
Chrysler, meanwhile, was hurt by sales declines for its market-leading minivans and Ram pickup trucks despite steep discounts on both throughout the month.
Chrysler's sales decline came in one of its last months as a unit of DaimlerChrysler AG (DCXGn.DE). It is being taken private by Cerberus Capital Management (CBS.UL) in a $7.4 billion deal expected to close this quarter.
For its part, Ford said its first monthly gain in showroom sales since October showed it was on track to stabilize its U.S. market share near 13 percent as it cuts back on sales to commercial fleets and shutters factories.
Ford, which offered a package of interest-free loans and rebates in June, managed to hold sales of its best-selling vehicle — the F-Series pickup truck — almost flat in June.
Ford, which has staked its turnaround effort on a new line-up of crossovers like the Ford Edge, said sales in that category jumped 83 percent.
Sales results for the automakers were adjusted for an additional selling day in June compared with a year ago.
