Business

Saturday October 3, 2009

US vehicle sales plunge


DETROIT: US vehicle sales tumbled by more than 20% in September as showrooms emptied after a government-funded summer sales boom and Ford Motor Co gained ground on its major rivals, sales figures released on Thursday showed.

Sales at General Motors Co and Chrysler – the two US vehicle makers struggling to regain momentum after emerging from bankruptcy – tumbled by the deepest margin in September.

GM sales dropped 45% while sales at Chrysler were off 42%.

Ford, meanwhile, managed to hold its sales decline to 5% despite low inventories and sharply reduced spending on incentives. It estimated that it gained three percentage points of market share to 15% of the US market in September.

Hyundai Motor Co, which has taken market share through the US recession on a growing reputation for low-cost and high-quality vehicles, saw its sales jump 27% in September.

On the annualised basis tracked by analysts, industry-wide US vehicle sales dropped to near nine million vehicles in September, near the weakest point of a four-year downturn that the US market hit in February.

By contrast, the August sales rate had been above 14 million, powered by the US government’s “cash for clunkers” programme and taxpayer-funded credits of up to US$4,500 for consumers who traded in old vehicles.

“We believe consumer traffic at dealerships evaporated in the absence of the incentive programme, which ended in August,” Standard & Poor’s equity analyst Efraim Levy said in a note. “However, we expect the September lull to be temporary, as the comparisons get easier and we see the economy improving.”

Major vehicle makers also held out hope for a gradual recovery in sales in the fourth quarter once dealer stocks of cars and trucks are built back up in the coming weeks.

“We are not bleeding like people think we are,” said Fiat SpA chief executive Sergio Marchionne, who has taken charge of Chrysler’s turnaround plan after the Italian firm took management control at the US vehicle maker.

Marchionne, who spoke to reporters at Chrysler’s headquarters outside Detroit, said a combination of factors including reduced incentive spending led to the depressed sales figures for September. “The future is going to be a lot better,” he said.

GM said it was sticking with plans to increase production in North America by 20% in the fourth quarter compared with the third quarter.

“September was a tough transitional month for the industry, and a difficult year-over-year comparison for GM,” said Mark LaNeve, GM’s North American sales chief. “Fortunately, the fourth quarter looks brighter and our year-over-year comparisons should look more favourable.” — Reuters

US sales for the three major Japanese vehicle makers were also lower in September after gains in August during the shortlived cash-for-clunkers craze.

Honda Motor Co sales were down 20% in the month. Toyota Motor Co sales fell almost 13%. And Nissan Motor Co sales were down 7%.

Motor industry tracking firm Edmunds.com estimated that the average discount on a new car was US$2,557 in September, down about 12% from a year earlier.

That incentive spending is closely tracked by analysts and investors as a measure of the industry’s pricing power and the pressure to move inventory. — Reuters

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