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DETROIT — — Auto makers on Friday reported that their U.S. sales fell by double-digits in July as they struggled to keep up with consumers' growing demand for smaller, more fuel-efficient vehicles.
The companies were expecting July sales to be at their lowest level in more than a decade as sales of trucks and sport utility vehicles continued to plummet and new troubles in the auto leasing market further wrecked consumers' confidence. And they said things could get worse before they get better.
"We expect the second half of 2008 will be more challenging that the first half as economic and credit conditions weaken," Ford's marketing chief Jim Farley said in a statement.
General Motors Corp. said its sales plunged 26 per cent, led by a 35 per cent decline in sales of trucks and SUVs. Some car models showed strength, with Chevrolet Malibu sales jumping 79 per cent from the same month a year ago. But even GM's car sales fell 12 per cent as consumers looked elsewhere for fuel efficiency.
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Earlier Friday, GM reported a $15.5-billion (U.S.) second-quarter loss, the third-worst quarterly performance in the company's history, as North American sales plummeted and GM faced expenses from labour unrest and its massive restructuring plan.
Ford Motor Co. said its U.S. sales fell 15 per cent compared with the same month a year ago. Its car sales were flat, and sales of the Focus small car rose 16 per cent. But sales of Ford's trucks and SUVs continued their steep decline, falling 22 per cent.
Toyota Motor Corp. said its sales fell 12 per cent last month, led by a 27 per cent drop in truck and SUV sales. Sales of its Prius hybrid fell 8 per cent as Toyota failed to keep up with growing demand for the fuel-efficient car.
Toyota Motor Sales USA president Jim Lentz said Toyota is accelerating production of four-cylinder engines to meet demand. Toyota also announced last month that it plans to begin producing the Prius in the U.S. in 2010 to boost the numbers available for the U.S. market.
"Having the industry's most fuel-efficient lineup is of value to us so long as we have the right product mix in our showrooms," Mr. Lentz said in a statement.
Even Honda Motor Co. , which has reported sales increases in the last few months as consumers flocked to its fuel-efficient cars, said sales fell 2 per cent in July. Honda's car sales were up 14 per cent, but results were dragged down by a 22 per cent drop in truck and SUV sales. Honda said it was adjusting production to match increasing consumer demand for cars such as the Civic, which saw sales drop 4 per cent for the month.
Nissan Motor Co. was the only major auto maker to report a gain in July, with truck sales up a surprising 18 per cent thanks in part to the new Rogue crossover. Nissan's overall sales rose 8.5 per cent.
The weak U.S. economy and rising gas prices have taken a toll on sales all year, but the latest wrinkle to hit the market came last month, when Chrysler LLC announced that its financial arm would get out of the leasing business by the end of July because economic conditions have made leasing more expensive than buying for both consumers and the company. Auto makers have had to take losses on trucks and SUVs that come off lease because their value has declined far more than projected.
Ford then told dealers it would raise the price of leases on some trucks and SUVs, while GMAC Financial Services said it would stop offering leasing incentives in Canada. GM also warned dealers that changes to leasing in the U.S. could be coming later this year.
Mr. Farley said Friday it was too early to say exactly how Ford's leasing changes will affect sales, but he said he doesn't expect a big impact because auto makers will start making up for lower leasing rates with an escalation of incentives.
That rush began Friday, when Chrysler LLC announced new incentives for August intended to soothe customers who had planned to lease a vehicle, including a 72-month financing plan with monthly payments similar to those of 36-month lease payments. Buyers can also get up to $2,000 cash on some models.
The Associated Press reports unadjusted auto sales figures, calculating the percentage change in the total number of vehicles sold in one month compared with the same month a year earlier. Some auto makers report percentages adjusted for sales days. There were 26 sales days last month, two more than in July 2007.
