Plummeting Auto Sales amid fears of Recession
Amid the rising fears of an economic recession, the U.S automobile market has been bludgeoned with a steep decline in the sales figures as well as the profit margins of major automobile firms for the month of March. The demand for trucks and SUVs have declined sharply as the consumers have been hesitant because of sky rocketing gas prices, mortgage crisis and tightening credit . The only categories that survived the slump have been the small, fuel-efficient vehicles.
There was drastic fall in the sales percentage of various automobile giants. General Motors Corporation’s (GM) sales fell by 19%, Ford’s sales dropped 14% and even a concrete brand like Toyota saw its sales dropped by 10%. Compared to March 2007, this is a bloodshed. Chrysler dropped 19%, Nissan saw a drop of 4 % and Honda reported a loss of 3%. Speculations doing rounds in the automobile community suggest that, this downward slope might be here to stay and could get worse in the near term.
Jim Farley (S&M Chief, Ford Motors) in a conference call with reporters and analysts said, “I’d like to be able to tell you that the worst is behind us, but I really can’t give you that assurance.” According to him, the ‘availability of credit to the consumer’ is being cut down by banks and financial institutions. This will severely hurt sales and thus it would be even more difficult to maintain sales levels in the coming months, he added.
Chrysler tops the list of decliners:
The biggest plunge in the automobile industry was recorded by Chrysler’s LLC, amounting to 19.4%. It sold just 166,386 vehicles in the month of March. Sales of light trucks dropped by 21.7% and total car sales plunged to 13.1%.
Steven Landry (Exec. VP North America Sales) said, “The market is tough right now for certain vehicles, especially pickup trucks. We have reduced our daily rental fleet sales which makes our sales numbers lower." Till now, Chrysler sales are down 15.5% to to 453,871 from 537,249 at the same time last year.
Ford:
Even a 24% rise in sales for Ford’s popular Edge Crossover, wasn’t enough to make up for the falling sales of Ford’s pick-ups and SUVs. For the month of March, Ford including it’s Jaguar, Land Rover and Volvo divisions sold 227,143 as against the sales of last year, which were 264,975 vehicles. As compared to March 2007, Ford’s truck and SUV sales dropped by 16.7% this year. The vehicle model that suffered the most was Ford’s Expedition SUV. In accordance with the market and the slumping sales, Ford’s management is constantly meeting on a weekly basis to keep its production schedule in line. According to Jim Farley, Ford is not employing any optimistic approach. They will review demand and adjust production accordingly
Toyota:
Last year’s second best automaker in the United States, Toyota took a nasty beating in March this year. With truck and SUV sales down by 14% and car sales down by 7%. However, Toyota Tundra pickup saw an unexpected rise in sales by 17%. But again, the total sales percentage was dragged down by SUV sales which dropped by 20%. For the first quarter, Toyota sales were down by 6%, in spite of outselling Ford by more than 43,000 vehicles in the first quarter itself.
Honda:
Honda Motors, which was steadily climbing the sales ladder with 3% increase in car sales, took a plunge with its trucks and SUVs sale dropping down to 12%. This loss was led by Honda’s Pilot SUV which recorded a 12% drop in sales.
The fall in truck sales is primarily due slowdown in housing construction. In all, small, fuel-efficient cars fared best. Ford Focus, a mid segment car saw a rise in sales by 24% for the month of March. Mid-segment cars from other manufacturers also had a good run in March 2007.
