Automakers Post Double-digit Drop In June Sales - Update

(RTTNews) - Major automakers continued with double-digit drop in U.S. sales for June 2009 amid the difficult economic environment, and the lower demand therein. General Motors Corp. (GMGMQ.PK) sales declined 33.6%, Toyota Motor Corp. (TM | Quote | Chart | News | PowerRating) sales decreased 31.9%, while Ford Motor Co. (F | Quote | Chart | News | PowerRating) reported a 10.9% drop from last year, the smallest decline recorded by a major automaker in more than a year.

Ford is obviously gaining market share from rivals GM and Chrysler, which are still being restructured under bankruptcy protection. Ford also said its June market share increased 3 points from year ago.

The signs of incremental improvement are obvious in the U.S. auto industry, with the sales numbers increasing steadily. The auto industry, which was dogged by weak consumer sentiments in light of the recession, is experiencing positive momentum.

GM has raised its production outlook for the second quarter, while Ford boosted its third quarter North America production forecast, citing market share gains and increased showroom activity.

Detroit, Michigan-based GM reported delivering a total of 176,571 vehicles in June, down 33.6% from 265,937 vehicles last year.

There were 25 selling days in June 2009, compared to 24 selling days in last June.

GM total truck sales fell 40.4% to 93,458 units from 156,713 units last year, and car sales were 83,113 units, down 23.9% from 109,224 units a year-ago.

Among GM's four core brands, Chevrolet sales fell 33.3% to 106,712 units in June, while Cadillac sales dropped 40.9% to 8,473 units. GMC sales slid 36.0% to 19,668 units and Buick sales declined 10.7% to 8,601 units.

However, the four core brands posted a 6% increase in June sales collectively, when compared with May 2009.

GM Certified Used Vehicles, Saturn Certified Pre-Owned Vehicles, Cadillac Certified Pre-Owned Vehicles, Saab Certified Pre-Owned Vehicles posted a double-digit drop in sales for June 2009.

However, sales of Hummer Certified Pre-Owned Vehicles soared 53% to 204 units over last year.

In June, GM North America produced 88,000 vehicles, including 52,000 cars and 36,000 trucks, which is down 74% compared with June 2008 when the region produced 341,000 vehicles, including 135,000 cars and 206,000 trucks.

At the end of June, GM had about 582,000 vehicles in stock, down 26% or about 206,000 vehicles over a year ago. There were about 250,000 cars and 332,000 trucks, including crossovers, in inventory at the end of June. Inventories were reduced about 93,000 vehicles compared with May.

For the year-to-date period, GM's U.S. vehicle sales fell 40.5% to 954,356 units from 1.60 million units in the same period last year. Car sales for the period dropped 41.6% to 402,530 units, while truck sales slid 39.7% to 551,826 units.

For the second quarter, GM currently expects to produce 394,000 vehicles, including 170,000 cars and 224,000 trucks. Earlier, the company estimated production of 390,000 vehicles, including 172,000 cars and 218,000 trucks.

GM filed for Chapter 11 bankruptcy protection end May and hopes to emerge from bankruptcy as early as possible, while it continues with restructuring on a fast pace.

The company is also drastically shifting its strategy from big gas guzzling cars to compact fuel efficient cars, narrowing its focus on core brands of Chevrolet, Cadillac, GMC, and Buick.

As a part of its strategy, the company has selected its assembly plant in Orion Township, Michigan and stamping facility in Pontiac, Michigan, to build its future small car.

Orion Assembly will be retooled and is anticipated to be a two-shift operation, building 160 thousand cars annually including both small and compact vehicles. The company expects to start preparatory work in late 2010 and anticipates production to begin in 2011.

GM also noted that the decision, which is dependent on the successful outcome of ongoing economic incentive negotiations between GM and state and local government officials, will restore about 1,400 jobs in total including 1,200 at Orion Assembly and 200 at Pontiac Metal Center #14.

The new small car will be an addition GM's growing portfolio of U.S.-built, highly fuel-efficient cars, including the Chevrolet Cruze and Volt.

GM plans to eliminate or sell all but four of its core brands: Chevrolet, Cadillac, GMC and Buick. Last month, the company agreed to sell its Swedish unit, Saab Automobile, to a consortium led by Koenigsegg Automotive. The agreement is tied to a $600 million loan by the European Investment Bank, which is backed by the Swedish government.

In addition to its Saab unit, GM is selling its Hummer Brand to Chinese company Sichuan Tengzhong Heavy Industrial Machinery, its Saturn brand to Penske Automotive Group, and plans to eliminate its Pontiac brand in 2010.

Last month, GM said it has decided to end a 25-year joint venture with Toyota, the New United Motor Manufacturing Inc. or NUMMI, as a part of its new viability plan.

As GM and Toyota could not reach a deal on a future product plan on reasonable terms, GM said the NUMMI joint venture will not be a part of the New GM. Accordingly, NUMMI will end production of vehicles for GM in August and no future GM vehicles planned for the joint venture.

NUMMI manufactured GM's Pontiac Vibe, which the company decided to eliminate in 2010. Toyota uses the plant to build the Corolla sedan and the Tacoma compact pickup truck.

Commenting on its recent changes in its stock price and volume, GM today said it has noticed a recent elevation in its stock movement at prices in excess of $1.

GM management strongly believes that any recovery for the common stockholders in the chapter 11 bankruptcy process is highly unlikely, even under the most optimistic of scenarios. Stockholders of a company in chapter 11 proceedings generally receive value only if all claims of the secured and unsecured creditors are fully satisfied.

Among others in industry, Japanese automaker Toyota reported June sales that declined 31.9% to 131,654 units from 193,234 units in the prior year month.

The Toyota Division posted June sales of 114,780 units, a decrease of 33.6% from the same period last year. The Lexus Division reported June sales of 16,874 units, a decrease of 16.7% from the year-ago month.

Another peer, Ford Motor reported it sold 155,195 vehicles in June, down 10.9% from 174,091 vehicles sold in the same month of last year.

Total sales of Ford, Lincoln and Mercury vehicles fell 11.3% to 148,153 units, and Volvo sales declined 0.6% to 7,042 units over the year ago month.

In the Ford, Lincoln and Mercury brands, car sales for the month fell 17.0% to 54,040 units. Total Truck sales for the month declined 7.7% to 94,113 units.

Ford is the only major U.S. automaker that has not filed for bankruptcy. GM filed for bankruptcy in May, while Chrysler filed for bankruptcy protection in late April.

Chrysler Group reported that its June U.S. vehicle sales declined 42% to 68,297 units from 117,457 units in the year-ago month.

Total car sales fell 48% to 15,504 units, while total truck sales dropped 40% to 52,793 units from the prior year month.

Daimler AG (DAI | Quote | Chart | News | PowerRating) reported that its June month U.S sales for the Mercedes-Benz Cars division, Mercedes-Benz and smart combined, declined 26.45% to 16,271 units from 22,121 units last year.

Mercedes-Benz USA reported a 22.58% decline in June sales that totaled 15,155 vehicles. Sales from smart USA declined 56.15% to 1,116 vehicles from last year.

Nissan North America Inc. (NSANY | Quote | Chart | News | PowerRating) reported sales for June of 58,298 units, down 23.1% from 75,847 units a year ago. Total car sales dropped 26.5% to 40,172 units, while total truck sales fell 14.5% to 18,126 units from the year-ago month.

BMW Group in the U.S. said that its June sales fell 20.3% to 20,849 vehicles from the 26,155 vehicles sold in the same month last year.

GM closed Wednesday's regular trading session at $0.91, down 18 cents or 16.74% on a volume of 60.59 million shares.

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