New Car Sales Fall Again
June's new car sales fall to lowest level in years
State faces ripple effect; Navistar will idle plant in Indy another 4 months
By Ted Evanoff
Indianapolis Star
Put off by high gasoline prices, drivers stayed away from new car lots in June, pushing auto sales nationwide to the lowest volume in years.
Automakers on Tuesday said they sold 1,188,531 new cars and trucks in June, down 18.3 percent from a year ago and a volume typical of the early 1980s before the truck craze took off.
The drop in sales is sure to spread more gloom in the Indiana auto-parts industry, which employs about 70,000 workers supplying components to vehicle assembly lines throughout North America.
Falling orders for Ford F-series full-size pickup trucks, long the best-selling vehicles in the nation, led Navistar to push back the reopening of its Indianapolis diesel plant from mid-July to an undefined day in November. The Eastside engine assembly plant laid off nearly 500 workers in May. The casting plant remains open.
General Motors, down to its last $20 billion and trying to conserve cash, still offered consumers zero-percent financing for six years on its full-size trucks in June. The incentives helped GM sell 46,000 of its all-important Silverado and Sierra pickups -- Sierra sales actually rose -- and fend off Toyota's bid to take the national sales lead from the Detroit automaker.
Toyota's supremacy would have marked the first time General Motors was not the U.S. sales leader since it surpassed Ford in the 1920s on its way to becoming what was the world's largest corporation.
"We saw some decent traffic at the end of the month,'' said Max Watson, general manager at Skillman Chevrolet in Indianapolis. "But gas prices are taking a toll on the industry as a whole. Not only were GM, Ford and Chrysler down, but Toyota was down as well.''
Chrysler, which relies on trucks for the vast bulk of its business, sold 35.9 percent fewer autos in June, while Ford dropped 27.8 percent, Toyota 21.4 percent, GM 17.7 percent and Nissan 17.7 percent. Also, Mitsubishi sales fell 42.4 percent, Jaguar 36.1 percent, Porsche 18.9 percent, BMW 11.1 percent, and Mazda 7.7 percent, reported Morgan & Co., a market researcher in West Olive, Mich.
Among the major automakers, only Honda recorded a sales gain -- 1.1 percent. Higher sales also occurred at Mercedes, up 12.9 percent; Subaru, 5.3 percent; Hyundai, 3.5 percent; and Volkswagen, 1.6 percent.
In Indianapolis, some dealers may have seen sales of new autos drop by half as gasoline pump prices surpassed $4 a gallon in June, Watson said. That has forced many dealers to rely more on their garages and used car lots for revenue.
"It's not that people aren't purchasing cars. They're moving from new cars to used cars,'' looking especially for higher-mileage autos, Watson said. "To stay in business these days you need a good used-car department and a good service business to survive. We've had such a long run of good business that what is happening now shouldn't come as a surprise, but it has.''
Less than five years ago, forecasts called for the automakers to sell ever more vehicles and reach 18 million sales by late this decade. Instead, oil prices soared. Sales of less fuel- efficient pickups and sport utility vehicles, the bread and butter for the Detroit auto industry, soon sagged. This year, the industry is on pace to sell about 13 million new autos, a volume typical of 25 years ago.
Sales of trucks produced by the Detroit automakers slumped 26.8 percent in June to 342,193 trucks, while sales of cars made by Japanese companies sank 1.2 percent to 325,728 vehicles, Morgan reported. Automakers mark it as a sale when a vehicle leaves the assembly line for a dealership.
Because a third of the cars sold in the nation are imported from overseas, while 82 percent of the trucks are made in North America, Indiana auto-parts makers are more exposed to the truck business. Sales of sport utilities made on truck frames, such as the Ford Explorer, dropped 27.1 percent in June, leading Ford to predict the segment will not rebound soon.
"Our view is that gas prices aren't likely to go down, and more importantly, many consumers have moved on," George Pipas, Ford's top sales analyst, told The Associated Press. "We believe that the segment has merit for certain consumers but is not likely to rebound at any point."
Sales of new U.S. autos now have fallen for eight straight months.
By fending off Toyota, GM pleased investors. Its stock rose 25 cents to close at $11.75 after reeling to $10.57 momentarily on Monday. That was GM's lowest level since Sept. 22, 1954, according to the University of Chicago, AP reported.
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This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com