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Auto Industry's Recovery Stalls

Thu, 07/01/2010 - 2:29pm
Manufacturing.net

DETROIT (AP) -- Most automakers saw their U.S. sales drop from May to June, a sign that this year's slow recovery in the industry may be stalling.

Americans are delaying big-ticket purchases because they're worried about their jobs in a period of high unemployment. Nervous consumers could mean a tough summer for automakers, who hope to improve sales after a dismal 2009.

"Consumers are clearly hunkering down in light of the current environment, waiting for signs of a renewed recovery," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.

Job worries were reinforced Thursday when the Labor Department reported that new claims for jobless benefits jumped last week. Claims have been stuck above 450,000 since the beginning of the year, raising concerns that jobs remain scarce as the economy recovers from the worst recession since the 1930s.

The auto industry's struggles could be good news for some consumers. Analysts say if the month-to-month declines continue, automakers will be tempted to expand sales promotions such as low-cost leases, zero-percent financing and cash rebates. But for now, buyers will have to wait for sweeter deals. Automakers averaged $2,661 in deals per vehicle last month, down $36 from May, according to the Edmunds.com automotive website.

Sales of new cars and trucks for General Motors Co., Ford Motor Co., Toyota and Chrysler Group LLC fell between 12 and 14 percent from May to June. Subaru and Honda were also down, but Hyundai bucked the trend with a slight gain.

"Recent economic news continues to point to a slow recovery with some volatility in it," said Steve Carlisle, GM's head of global product planning.

Carlisle pointed to declines in fleet sales as a major reason for GM's slowdown from May. Those sales, which go to bulk buyers such as the government and rental car companies, bring in less money than sales to individuals. GM sold 25,000 fewer vehicles to fleets in June.

Car sales to individuals often slow in June, as deals during the long Memorial Day weekend bring in customers that might have bought cars the following month. Automakers are still predicting a gradual recovery in the last half of the year, and said they weren't too concerned about the slowdown.

Sales of GM's four core brands -- Chevrolet, Buick, GMC and Cadillac -- rose 36 percent over June of last year, helped by strong demand for crossovers and some recovery in pickups. Still, last June was a relatively weak month as GM headed into bankruptcy protection and the industry was in the midst of its worst annual sales in 30 years.

Ford's overall sales increased 15 percent over last June. Sales of its new F-Series Super Duty pickup rose 58 percent from a year earlier, although sales of its top-selling F-Series pickup fell 7 percent from May.

Chrysler said all four of its brands saw gains from June of 2009. But sales fell 12 percent from May and the company conceded that there are signs of economic weakness.

"While there is data that shows the economy is starting to recover, credit is not flowing as freely as it used to, unemployment figures are still a concern for many families in the United States, and consumers are being prudent with their purchases," Chrysler said in a statement.

Other automakers reporting Thursday:

-- Hyundai Motor Corp. reported a 4 percent increase from May and a 35 percent jump from June of last year, helped by sales of its midsize Sonata sedan.

-- Toyota Motor Corp., which has been forced to offer unprecedented deals to counter a series of safety recalls, saw its sales drop nearly 14 percent from May but said they rose 7 percent over June of last year.

-- Honda Motor Co.'s U.S. sales slipped 9 percent from May but rose 6 percent over June of last year.

-- Subaru's U.S. sales fell about 9 percent from May. 

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