General Motors's 24 percent slide in sales led a sharp decline for Detroit carmakers in June as Japanese firms ramped up incentives and grabbed more market share, sales reports showed Tuesday.
Toyota reported a 6.1 percent jump in monthly sales to 245,739, just below that of number two Ford. Honda saw a 7.3 percent increase to 140,935.
Analysts said these manufacturers boosted consumer incentives, catching Detroit by surprise, and gained more sales across the auto spectrum.
Nissan's sales increased 18.2 percent and South Korea's Hyundai saw an 11 percent jump.
By contrast, Ford Motor Co. said its US sales fell 8.1 percent in June to 247,599 vehicles amid a hefty decline in passenger car sales.
Chrysler Group, the US division of DaimlerChrysler which is being sold to a private equity firm, posted a one percent drop in sales to 183,347 vehicles, the company said.
Overall sales for the industry were down three percent for the year, according to AutoData Corp., which said US manufacturers held 50.2 percent of the market to 42.7 percent for Asian brands.
According to Autodata, Toyota is running ahead of Ford for the first half of the year with 1.331 million vehicles sold to Ford's 1.285 million.
David Healy, an analyst at Burnham Securities, said that GM's June sales were exceptionally poor, even accounting for special factors.
“Any way you slice it, GM had a very weak sales experience in June,” Healy said.
In part, according to Healy, the whole auto industry was hurt by soft economic conditions. Declines in home construction, he said, probably hurt sales of pickup trucks, especially in Florida and California, where the dropoff in the real estate market has been sharp.
High fuel costs also discouraged buyers of many domestic truck models, the analyst said.
But “GM dragged the whole industry down,” Healy said, accounting for most of the loss for the entire industry.
Alex Rosten, an industry analyst at Edmunds.com, said GM and other US automakers appeared unprepared for the market assault from Toyota and Honda, which have been expanding their product lineup.
“The single most important factor in GM's horrible sales was a lack of incentive spending,” Rosten said. “I think they were taken by surprise by how much the foreign automakers were willing to push incentives.”
Rosten said his firm's analysis showed GM cut back 9.7 percent from last year on incentive spending while Honda increased incentives 81 percent and Toyota 26 percent.
The incentives may include low-rate or zero-percent financing, rebates or discounted lease payments.
For Honda and Toyota, “their dollar amounts are still lower (than most US automakers) but historically these are some of the highest levels we're ever seen,” Rosten said.
“We are going to see a substantial incentive increase throughout the summer, mostly from GM.”
GM said its dealers delivered 326,300 vehicles with most of the decline coming from rental sales. But GM said its retail sales were also below expectations.
“Given the planned reduction in daily rental sales, we expected June would be a tough comparison to a year ago,” said said Mark LaNeve, vice president of GM North America.
“Our retail performance for the month was also below the solid running rate we've experienced for the first half of the year which we attribute to a soft industry and lower incentive spending than our competitors.
“However, we continue to believe that maintaining a disciplined approach to both incentives and daily rental car sales is key to making our marketing strategy work in the long run,” he added.
Ford also attributed the bulk of its sales decline to a planned reduction in low-margin sales to rental companies.
Industry analyst Healy said that despite GM's “lousy” month, it has made progress in turning its fortunes around. He said the volatile monthly sales figures may improve in the coming months.
“GM has cut nine billion dollars of annual overhead and has introduced new models that are quite profitable,” Healy said.
“They are close to break-even in North America. Ford has a long way to go.”
