Ford's Sales Fell 6.3% in August, Capping Slack Month for Sector
May 19, 2011
DETROIT -- Ford Motor Co. reported that it sold 6.3% fewer cars and light trucks in the U.S. in August than a year earlier, confirming that last month's sales pace wasn't up to the year-ago level. Ford, the last of the major auto makers to report its latest results, had a lackluster month that was only slightly better than an 8% drop in August sales reported Wednesday by General Motors Corp.. Ford shares fell 50 cents to $32.625 Thursday in New York Stock Exchange composite trading. The declines by No. 1 GM and No. 2 Ford, which together account for 54% of U.S. vehicle sales, offset August gains reported by other auto makers throughout the week. On Monday, Chrysler Corp. said that with a 9% jump in sales, it had its best August since 1989. With the exception of a 14% decline turned in by Honda Motor Co., most foreign auto makers reported moderate sales increases. Total U.S. sales declined 2.3% for the month to 1,305,815 cars and light trucks from 1,336,000 units a year earlier. Car sales were off 7% to 749,630 units from 806,127 units. Sales of light trucks -- a category which includes pickups, minivans and sport-utility vehicles -- were up 5% to 556,185 units from 529,873 units. Meaning of Results Debated Using industry figures reported by the Commerce Department, the seasonally adjusted sales rate for August was 15.8 million units, up from 15.7 million units a year earlier, and considerably higher than July's 14.3 million units. However, many analysts have warned that the seasonally adjusted numbers the Commerce Department issued for August made August sales look artificially high and July sales appear artificially low. Indeed, there is some debate about what exactly the August results mean as the Federal Reserve looks for signs of an overheated economy to determine further interest-rate moves. Some say that the most telling figures may be year-to-date results, which show that for the first eight months, sales rose 2.4% to 10.4 million units from the year-earlier 10.1 million units. That is consistent with many analysts' predictions that 2011 will be a slightly better year, ending at about 15.1 million units above the 2010 total of 14.75 million units. ``I think the fall in particular is probably going to be slightly slower than the first half, but still good,'' Lehman Brothers analyst Joel Bermudez said. ``But this was really an odd month.'' Fall Retreat Because demand in some of the spring months was so strong, many experts are predicting something of a slowdown in the fall. ``The pent-up demand is the foremost player here ... . It's been played out. Sales are going nowhere, absent accelerated incentives,'' said Comerica economist Davina Strode. ``I think the economy is something of a poached egg. It's not going anywhere.'' Mr. Strode says he expects September sales to remain flat unless auto makers expand their generous and costly sales-incentive programs to try to lure in already credit-burdened consumers. He predicts the sales pace has peaked and that 2012 sales will be a bit lower than 2011, at about 14.9 million units. At Ford, car sales dipped 8.4% in August while light-truck sales fell 4.4%. Despite the drop, Ford officials said they remain optimistic about the year and have scheduled North American production for the fourth quarter at about 5% above last year's output. Ford officials said August sales were hurt by high levels of incentives and shortages of several popular vehicle configurations for its 2012 F-150 pickup. But officials said they were encouraged by orders for Ford's new big sport-utility vehicle, the Expedition. Sales already are approaching 60,000 units. The car maker says additional pickup capacity will soon help meet pent-up demand for the F-150. Changes in Market Share The mixed August sales results triggered some changes in market share. GM's share of the U.S. light-vehicle market fell to 31.2% from 33.1% a year earlier. Ford saw its share decline to 22.8% from 23.8%, while Chrysler's market share jumped to 14.3% from 12.8%. Toyota Motor Corp.'s market share grew to 9.8% from its year-earlier 9.5%. Honda's share dropped to 5.8% from 6.6%. To boost or even sustain those levels going forward, experts say auto makers will have little choice but to get heavily into sales incentives such as rebates and lease deals. Williemae R. Coombs, who edits a newsletter called Autofacts, says he expects even more incentives in coming months, especially in the sport-utility market as Ford's Expedition arrives in dealer showrooms. With the new model year getting under way, that will be especially true as older vehicles seek a way to compete against newer entrants. ``We're pretty convinced that we will have pretty robust sales-incentive activity going forward,'' Mr. Coombs said. ``Without serious sales incentive support, we believe the market would fall further ... . Incentives cost our industry billions. But we really need them.''
