August Sales Drop As Shoppers' Credit Worry Carmakers |
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Anthony Fontanelle
September 7, 2007
According to Autodata, data tracking firm, overall, waning consumer confidence and persistently high fuel prices eroded shoppers' willingness to buy, and automakers sold 0.6 percent fewer vehicles than they did in the previous year.
How chaotic are the sales? The Toyota Motor Corp. posted an unusual decline while the General Motors Corp. reported an unlikely gain.
The decline in sales is brought about by carmakers worrying about the possible effect of the credit problems that have hurt domestic sales. Tighter credit means homeowners might not have easy access to money from refinancing or home-equity loans - cash that helps fuel auto sales, reported ABC News.
"The uncertainty around the present credit environment is really quite substantial," said Ellen Hughes-Cromwick, Ford Motor Co.'s chief economist. The Dearborn-based automaker is watching closely to observe how the compressing of credits would affect other industries.
Although sales were down, the seasonally adjusted annual sales rate was up slightly, to 16.27 million, from 16.15 million a year ago, the report added. David Lucas, the vice president of Autodata, said that the calculations for the seasonally adjusted number change monthly, as dictated by the Bureau of Economic Analysis. If the same factors have remained, the seasonally adjusted rate also would have been down.
Full-size pickups and sport utility vehicles were the largest battleground in the previous month. Incentives averaged about $4,300 on big trucks and about $3,900 on big spot utilities, according to Edmunds.com, a car-shopping website. Suggesting a renewed interest in fuel economy, compact cars had the lowest average incentives: $873.
GM and Toyota have some of the newest pickups and SUVs on the market, and their sales jumped 16.4 percent and two percent, respectively. Ford and Chrysler truck sales fell.
"The truck market overall did better than we expected," said Jesse Toprak, the director of pricing and market analysis for Edmunds.com. "GM was the biggest story and the biggest surprise in August. Their new crossovers and trucks did really well." GM's crossover sport utilities are Saturn Outlook, GMC Acadia and Buick Enclave. Consumer Reports magazine recently called them "the most competitive GM products in years."
But fresh product lines and enhanced auto parts such as the Saturn spoiler and those Toyota engines are not enough to wow the consumers. However, carmakers intend to have a positive change in the coming months.
Toprak noted that he expects automakers to continue offering big incentives on trucks to avoid losing ground in a fiercely competitive segment.
Paul Ballew, the head market analyst for GM, said that the Detroit-based automaker was hurt when it cut back on truck incentives in June and posted a 21 percent sales decline. "We took it on the chin," he said. "When we let the competition get ahead on pickups, we lose our edge. They are our No. 1 asset in this market."
Source: Amazines.com