General Motors and Ford Motor reported double-digit U.S. sales declines in February and cut
second-quarter production plans in the face of a slumping economy and high gas prices.
GM's sales slid 16 percent on an adjusted basis -- at the bearishly high end of analysts' expectations -- on weaker demand for such large trucks as the Chevrolet Silverado pickup truck and Chevy Tahoe and Saturn Vue sport utility vehicles. It also said it would cut second-quarter production by 5 percent from year-ago levels.
"February was a very disappointing month for industry sales. I think most everyone is going to be down," GM Vice Chairman Bob Lutz told Reuters at the Geneva auto show.
"We still expect the economy to recover in the second half," he added. "Our crystal ball is not that much better than anybody else's."
Auto sales results represent one of the first snapshots of overall U.S. consumer demand, and the weakness could provide more evidence for those who believe the U.S. economy has already slipped into recession.
Ford's sales fell 10 percent and said it would cut second-quarter production by 10 percent due to weaker demand for its market-leading F-Series full-size pickups and SUVs like the Explorer and Expedition.
Japan's Toyota Motor and Nissan Motor reported February sales declines of 6.6 percent and 3 percent, respectively, while Honda Motor did the best among major automakers with an increase of nearly 1 percent.
Sales numbers were adjusted for an additional selling day in February compared with a year earlier.
"It would be premature, certainly, to conclude that either the economy or the industry have reached bottom yet, but we are doing our best to maintain a steady hand on the wheel as we
navigate through this current down cycle," Ford economist Emily Kolinski Morris said on a conference call with analysts and reporters.
She added that Ford, the No. 3 automaker by sales in the U.S. market, expects U.S. gross domestic product this year of about 1.5 percent.
Analysts expect industrywide 2008 U.S. auto sales to extend a downturn that began to accelerate in the second half of last year, reflecting the slumping housing market, higher gas prices and tighter credit. Some industry observers have even predicted a 15-year low for sales this year.
"We're obviously not insulated from the subprime crisis or the 'R' word that everyone is talking about," Nissan division manager Al Castignetti told Reuters in a telephone interview.
Kolinski Morris said Ford's expectations of a better second half in U.S. vehicle sales is not dependent on a recovery in the slumping U.S. housing market.
However, demand doesn't seem to be improving in the near term.
"There was a two-week period that closed the month that was pretty stale," Ford chief sales analyst George Pipas said. "That was true for Ford; it was true for the industry."
As a result, Ford said it would eliminate shifts at four U.S. plants and lay off some 2,500 workers -- or almost 5 percent of its remaining work force -- as part of an effort to cut costs and return to profitability next year.
The layoffs come as the automaker is offering buyouts and early retirement incentives to all 54,000 of its U.S. factory workers in an attempt to recover from a $2.7 billion loss in 2007.
Toyota's February sales fell 6.3 percent for its Toyota brand and another 9.3 percent for its luxury Lexus unit as overall sales of both cars and trucks fell.
Nissan's sales in its Nissan brand fell 3.2 percent, while its luxury Infiniti unit reported a decline of 0.4 percent.
As sales have slumped, incentives have risen among most automakers. Edmunds.com said industry incentives in February rose 17 percent to $2.95 billion, with the three U.S. automakers accounting for almost 71 percent of the total.
On an average basis, U.S. incentives in February rose almost 1 percent, or $22, from the prior month to $2,435 per vehicle sold, according to the industry tracking service.
Ford marketing chief Jim Farley said the automaker had stepped up incentives on some vehicles like the F-150 pickup truck line, but added that Ford's overall incentive spending was lower than a year earlier.
"The industry as a whole is going to be seeing more pricing pressure," said Farley, who expects stepped-up discounting on full-size trucks and SUVs ahead of the launch later this year
of Ford's new F-150 line.