A Summer Not to Remember for U.S. Auto Industry

June New-Car Sales Slip 16.7% From a Year Ago, and Experts Expect No Relief in July, August

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DETROIT (AdAge.com) -- The auto industry will report another bleak U.S. sales month in June when carmakers release monthly sales figures next week, experts predict.

Auto information website Edmunds.com will release its own projections tomorrow morning, saying new retail and fleet vehicles sales of 1.2 million units are expected this month, a 16.7% drop from June 2007 and a 13.3% decrease from last month. June had 24 selling days, three less than June 2007, and when adjusted for this difference, the sales decrease is 6.3% from last June, Edmunds says.

Not so good for Detroit
Among the six major automakers, four will see lower adjusted June sales compared with the year-ago period, Edmunds said, with Chrysler having the biggest sales drop, 22%, followed by General Motors Corp. (15.9%), Ford Motor Co. (15.4%) and Toyota Motor Sales USA (off by 0.7%).

"Although Toyota has had lower U.S. sales so far this year, it's faring better than Detroit," Jesse Toprak, executive director-industry analysis for Edmunds, told Advertising Age. With the auto industry down overall this year, "it shows no one is immune" from current economic market pressures, he said.

GM's new round of incentives, announced June 23, offering zero-percent financing for 72 months on many models, has generated some activity this week that will help boost sales in the final days of the month, Mr. Toprak said. But GM's latest deals won't be enough to make up for its slide the rest of the month.

He said that "Toyota is going to get closer" to GM in sales in June, but he believes GM will remain the nation's biggest automaker by volume because sales spurred by the new incentives should be enough to keep the auto giant on top.

Nissan North America and American Honda Motor Co. will see U.S. adjusted vehicle sales gains of 4.1% and 17%, respectively, in June vs. June 2007, Edmunds predicts.

Small-car sales
As Americans continue to shift to small cars and out of large pickups and SUVs, small cars are enjoying their highest market share of total industry sales in recent history, while the large-pickup segment is seeing its lowest share ever -- single digits for the first time, Mr. Toprak said.

He said the economy's headwinds of high gas prices and a hurting housing market don't bode well for the industry in the next couple of months. May, June and July have historically been the biggest sales months for automakers selling in the U.S., he said. But with the bad news piling up on the industry, Edmunds this month lowered its calendar 2008 sales forecast from 15.5 million units to 14.9 million units sold.

The industry sold 16.1 million new vehicles in the U.S. last year and 16.5 million in 2006, according to Automotive News.

The industry's major players, reacting to sales trends, have trimmed production several times on full-size pickups and big SUVs, while trying to crank out more cars and crossovers.

Low consumer confidence
Jim Hall, managing director of auto consultant 2953 Analytics, said a newly released low-consumer-confidence rating of 50 this month is just one more of several already-fired triggers that have a negative impact on consumers' new vehicle purchases. "July will be worse than June, and August is going to be bad."

He said without incentives the sales picture would be even worse. But he's already pondering Americans' vehicle purchase considerations after what he called the industry's current big dig. "Some brands are going to get lost, and some will get rediscovered," Mr. Hall said. "There's a potential for horrible and good for everybody, including Toyota."
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