Wednesday, July 02, 2008

June Sales Results Are In - And They're Ugly

By Chris Haak


Yesterday, all of the major automakers reported their June sales results. The market was down 18.3% in June 2008 compared to June 2007. Unsurprisingly, they were ugly nearly across the board, with the notable exceptions of Honda (which was up 1.1%, thanks to its car-heavy, truck-light lineup), Hyundai (up 3.5%, for more or less the same reasons), Subaru (up 5.3%, thanks to its car-heavy lineup), and Volkswagen (thanks to the Tiguan's launch, the Passat sedan, Eos/New Beetle convertibles, and Audi A4). Otherwise, everyone was down.

Hit the hardest was Chrysler LLC, down a staggering 35.9% compared to last June. The company's sales are also down 22.0% year to date. Chrysler managed the unusual feat (in the current market) of its car sales actually dropping far faster than its truck sales (car sales down 49%, truck sales down 30%). The company attributes this to "planned reductions in fleet sales." Since last year more than half of all Chrysler brand sales were to fleets, that may not be a bad thing. Ironically, the minivans that were built in the plant whose indefinite closure was announced yesterday saw significant sales increases (Grand Caravan up 52%; Town & Country up 21%), although their sales are still down significantly year to date (Grand Caravan down 27%; Town & Country down 10%). Every Chrysler-brand vehicle except for the Town & Country saw its sales decrease by no less than 38% (PT Cruiser). Even the 300, which is not a model on the chopping block, saw its sales decline by 62%. The Sebring, while it watches it competition like the Malibu, Fusion, Camry, Accord, Altima, and even G6 leap through the sales charts, saw its sales drop by 50%. The news wasn't much better at Jeep, with all models down except for the Patriot (up 6%) and the brand down 40% overall. At Chrysler LLC's Dodge Division, sales were down 30% overall, with the only models showing gains the limited production Viper (78 sales in June 2008 versus 22 sales in June 2007) aforementioned Grand Caravan. Most disturbing for Chrysler is that some of their most fuel efficient models - the Caliber (down 44%), Compass (down 39%), Avenger (down 49%), Sebring (down 50%), and PT Cruiser (down 38%) all struggled. One bright spot was the new 2009 Journey crossover, which sold 5,162 units, making it the 5th-best-selling Dodge vehicle just a few months after its launch.

The overall news wasn't much better at Ford, but at least the brands' drops were pretty consistent among Ford, Lincoln, Mercury, and Volvo. Ford Motor Company June 2008 sales were down 28.1% compared to the year-earlier period and down 14.3% year to date. The only models to see sales increases were the Fusion (up 18.4%), Milan (up 7.6%), Volvo V70 (up 168.0%) and C70 (up 64.2%). Fortunately for Ford, there are several high-volume launches coming this month - both the Lincoln MKS flagship sedan and the Ford Flex large crossover - will drive the company's overall sales needle forward. The only models with single-digit sales increases were the Focus (down 5.5% on the heels of the stratospheric month the car had in May), Taurus X (down 9.8%), Town Car (down 9.7%), and Volvo S80 (down 6.0%). Some lowlights of the Ford sales figures for June were the Taurus (down 53.8%), Expedition (down 59.8%), Explorer (down 52.0%), F-Series (down 40.5%), Navigator (down 41.3%), Mark LT (down 46.4%), Mountaineer (down 61.8%), Volvo S40 (down 63.4%), S60 (down 62.2%), and XC90 (down 47.2%).

The smallest failure among the Detroit Three, GM, saw its sales results boosted by its longer-than-72-hour 72-hour sale, which gave 0% financing on many models for 72 months as well as generous cash incentives on several models, notably trucks and SUVs. GM's sales for June 2008 were down 18.5% and are down 16.5% year to date. Interestingly, and likely solely because of the generous incentives that GM lavished upon its trucks, light truck sales were "only" down 16.0%. Notably, GM includes crossovers such as the Enclave, Acadia, Outlook, Torrent, Equinox and even the HHR in their "light truck" category. Highlights for GM were the Cadillac CTS (up 16.0%), STS (up 12.1%), SRX (up 12.0%), Cobalt (up 21.6%), Malibu (up 73.4%), HHR (up 23.6%), Vibe (up 23.0%), Saturn Sky (up 44.1% thanks to $3,000 cash back), Equinox (up 45.9%), Trailblazer (up 28.2%, which is a huge surprise considering what the Envoy, 9-7x, Explorer, Pathfinder, and Mountaineer managed to not do), and Saturn Vue (up 24.8%). The Suburban hanging on with only a 0.1% decline is pretty impressive, too.

Models that saw significant sales declines for GM were the Enclave (down 18.4%), Avalanche (down 38.8%), Silverado (down 23.7%, but that's far less than any other non-GM full-size pickup's decline), Acadia (down 40.1%), Envoy (down 38.9%), Sierra (down "just" 18.3%), Yukon (down "just" 10.0%), Yukon XL (down "just" 17.2%), and Saturn Outlook (down 58.0%). Hummer deserves a special mention for dropping a staggering 60.1% as a brand, including 55.9% for the hulking H2 and 60.1% for the almost-hulking H3. No wonder GM is shopping Hummer; it really is too bad that they waited far too long for a smaller, more fuel efficient Hummer. At this point, such a vehicle will probably never see the light of day under GM's ownership. The Aveo's 19.7% decline is surprising at first glance, until one realizes that the larger, more powerful, more comfortable Cobalt now tops the Korean-built Aveo in highway fuel economy.

Toyota and Nissan both saw uncharacteristically steep declines in vehicle sales; this is the price that both brands are now paying for being "full line" automakers, in contrast with Honda who sells no V8s, rear wheel drive vehicles, or full-size pickups or SUVs. Toyota's sales were down 21.4% in June, and are down 6.8% year to date. Other than the Corolla (up 15.6%), few of Toyota's more fuel efficient offerings saw sales gains; the Prius was down 33.7% (blamed on "limited availability"), Yaris was down 4.5%, the Camry was down 10.8%, and the Scion lineup was down an aggregate 5.3%. The news in trucks and SUVs - with the exception of the recently-launched Sequoia (up 25.1%), Land Cruiser (up 94.0%), and LX570 (up 193%) - was sanguine. The Tundra, a truck that set the sales charts on fire in its first model year as a true full-size pickup, was down 47.1%; the Tacoma midsize pickup was down 25.9%; the 4Runner SUV was down 54.6%. Overall, Toyota division passenger car sales fell 7.1%. Toyota division light truck sales fell 39.1%. Lexus division passenger car sales fell 25.9%, and Lexus division light truck sales fell 35.9%.

Over at Nissan, the company saw truck sales fall by a staggering amount. Fortunately for Nissan, however, trucks make up a relatively small portion of their overall model portfolio. Nevertheless, Nissan's June sales fell 17.7% and are down 2.4% year to date. The bottom literally fell out of the truck and SUV market for Nissan; Titan full-size pickup sales fell 71.4%, Pathfinder sales were down 71.7%, Quest sales fell 62.3%, Frontier sales fell 58.1%, Armada sales fell 63.4%, XTerra sales fell 68.3%, and the all-new 2009 Murano sales were off 24%. Overall, Nissan light truck sales were down 37.9% in June.

Rounding out the other automakers with a US presence, BMW was down 11.0% (down 3.9% YTD), Daimler AG was up 12.9% (up 10.5% YTD), Mazda was down 7.7% (up 0.3% YTD), Mitsubishi was down 42.4% (down 23.4% YTD), and Porsche was down 18.9% (down 15.5% YTD).

GM does fire sales better than anybody; now the next question will be how adverse the impact was to their bottom line. Has their relatively successful June (compared to Ford and Chrysler) been at the expense of future sales - with potential buyers moving up their purchase plans in light of the great deals? Has the 72-hour sale further damaged GM's tenuous cash position and bottom line?

One thing that is clear from looking at all of these numbers; it's a great time NOT to be selling trucks and any other gas-guzzling vehicles. Good small cars are golden (Honda Fit sales were up 78.2%); mediocre small cars aren't (see the Chevy Aveo results above). It's also a great time to NOT be a full-line manufacturer, as evidenced by the relative sales success of Honda, Hyundai, and Subaru. By the way, the Accord (39,704), Civic (39,967), Camry (41,572), and Corolla (42,180) all again outsold the Ford F-Series (38,789). Just like the world changed forever on 9/11, the auto industry changed forever on 5/1/08.

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