Automakers suffered more steep falls in the US market in April as a weak economy prompted consumers to put off purchases, especially of fuel-thirsty sport utility vehicles, sales data showed Thursday.
General Motors and Ford saw double-digit declines in the month as SUV and truck sales tumbled, and Chrysler reported a whopping 23 percent slide as the overall auto market reflected a weak economy.
The declines put the overall market at a level around 14.7 million annualized sales, weaker than March and far below 2007 levels, said Himanshu Patel at JPMorgan Chase.
Dana Johnson, chief economist at Detroit-based Comerica Bank, agreed.
“In an environment of a weak US economy, car sales suffer, and we're seeing that especially for vehicles that need more gasoline — the SUVs and larger pickup trucks are taking a beating here,” he said.
“Car sales will recover when the economy begins to recover.”
Johnson said the worst may not be over for the auto sector but that the economy may start to reaccelerate soon, helped by Federal Reserve interest rate cuts and tax rebates as part of the government's 168-billion-dollar stimulus program.
“I think we began a mild recession in January,” he said. “With the aggressive response by the Fed and the tax rebates along with support from the trade sector, this is not going to be a deep and prolonged recession but it has some months to run yet.”
Rebecca Lindland, auto analyst at Global Insight, said she expects several more months of weak sales before a modest pickup later this year. For all of 2008, she expects sales of 14.9 million vehicles, or a 7.5 percent drop from 2007 levels.
Although automakers are struggling to regain market share, there is little they can do to boost overall sales, she said.
“With consumer sentiment so low, incentives don't help that much because consumers don't feel good,” she said.
“It doesn't matter how sexy the incentives are, people are still not going out and shopping.”
Chrysler sold 147,751 vehicles in a difficult month for the automaker that relies heavily on minivan and SUV sales.
“The overall decrease in April sales, particularly of pickup trucks, demonstrates that the auto industry continues to be under pressure from the national economy,” vice chairman and president Jim Press said.
GM said US sales slid 16 percent in April from a year ago on weak demand for trucks amid soaring gasoline prices and a supplier strike that slashed fleet deliveries.
GM, the world's leading automaker, said it had sold 260,922 vehicles in the US in April.
Sales of fuel-hungry trucks, including sport utility vehicles such as the massive Hummer, plunged 26.5 percent while car sales slipped a modest 0.2 percent.
“Consumer preference is shifting and we're shifting with it as evidenced by our strong car and crossover sales,” said Mark LaNeve, vice president of GM North America.
Ford, the number two US automaker, said it sold 220,727 vehicles in April, down 12.2 percent.
Ford reported an 18.3 percent slide in its truck category sales including SUVs while passenger cars were down just one percent. Ford also noted a sharp decline in sales to rental fleets which typically show little or no profit.
“Higher gas prices are accelerating the industry-wide shift from trucks and traditional sport utility vehicles to cars and crossovers,” the company said.
Japan's Toyota was behind Ford in the US market with April sales of 217,700 vehicles, a relatively modest decrease of 4.5 percent.
“Smaller vehicles are going over big,” said Jim Lentz, Toyota's top US executive. “With oil prices at record levels, compact cars and hybrids continue to lead the way.”
Japanese maker Honda said it delayed April sales figures due to technical difficulties but that preliminary data show that it sold more than 134,000 vehicles, compared with 126,419 vehicles for April 2007.
