Detroit Automakers' Sales Fall, but Less Than Feared
March sales fell sharply for General Motors, Ford Motor and Chrysler, but not as much as industry analysts had feared for any of the companies. Sales of Japanese automobiles also fell, though less steeply than they did for U.S.-based automakers.
In other automotive news Wednesday, GM's financing arm, GMAC, said it will resume making loans to subprime borrowers. Jump ahead in this story for details.
GM executives, echoing comments from other major automakers, said there were some signs that industry-wide auto sales were starting to stabilize after a brutal decline over the past year and a half.
GM executives said industry-wide sales closed the month on a strong note and seemed to move higher for all of the major automakers after televised remarks from President Barack Obama on the auto industry on Monday.
Obama repeated his support for preserving the U.S. auto industry and his administration offered to backstop the warranties offered by GM and Chrysler.
"He may have given the whole industry a lift," GM sales analyst Mike DiGiovanni told reporters and analysts. "Obama may have reassured consumers in general."
GM sales fell an adjusted 42.5 percent—a steep decline, but not quite as bad as the 45.8 percent drop projected by industry watchers.
GM sold 156,380 vehicles in March, down from 282,732 total units in March 2009. GM ended March with 765,000 vehicles in inventory.
At Ford, total vehicle sales came in at 125,107 units last month, compared with 213,074 vehicles in the same month last year.
Adjusted for the number of selling days this March compared with March of 2008, that comes out to a decline of about 38.9 percent. Analysts projected that Ford would report a decline of roughly 45 percent.
Domestic car sales fell to 46,467 cars from 73,296, an adjusted decline of 34.1 percent. Truck sales tumbled to 78,298 from 139,157, a decline of 41.5 percent.
Ford also said Wednesday that it idled production of its F-150 pickup truck for three weeks at its assembly plant in Kansas City due to slow demand. The F-150 has long been Ford's best-selling vehicle.
Ford builds the pickup truck on two shifts at the plant, which also produces the Ford Escape and Mercury Mariner sport- utility vehicles and their hybrid variants.
The pickup truck production was idled effective at the start of this week and production is scheduled to resume the week of April 20, Ford spokeswoman Angie Kozleski said.
Ford, which posted a company record net loss of $14.7 billion in 2008, said it expects to have gained retail market share in March. Its retail sales fell 36 percent from a year ago and sales to fleet customers were down 50 percent.
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Sales at privately held Chrysler fell 36.9 percent, less than analysts had anticipated. Chrysler sold 101,001 cars and trucks, against 166,386 at this time last year.
Last month was the first that Chrysler has sold more than 100,000 vehicles since last fall.
"The market is starting to show small signs of life, which need to be nourished like seedlings," said Jim Press, vice chairman and president of Chrysler.
The company extended its consumer incentive program, dubbed Employee Pricing Plus Plus, until April 30. The program offers employee pricing to all consumers along with interest-free loans for 48 months and cash discounts.
Chrysler, which is seeking $5 billion in additional U.S. aid, said it has an 87-day supply of vehicles, or 349,612 units, a 17 percent decrease from a year ago.
Meanwhile, Japanese automakers saw steep sales declines as well, though slightly less severe on a percentage basis than their American counterparts.
U.S. sales for Toyota Motor fell 36.6 percent on an adjusted basis, hitting a total of 132,802 vehicles. The company sold 217,730 cars and trucks in March of 2008.
Toyota's car sales for March totaled 80,597, down from 129,778 in the same month last year. Truck sales for Toyota declined to 52,205, down from 87,952 this time last year.
Honda Motor said its sales of cars and light trucks fell an adjusted 33.7 percent for the month, to 88,379 from 138,734 in the same period last year. Truck sales came in at 33,085, while the number of cars Honda sold reached 55,294.
Despite the declines across the industry, GM, Ford and Toyota all posted double-digit improvements from February, when the U.S. sales overall hit their lowest point in more than 27 years.
Sales are generally better in March as warmer temperatures help drive people to showrooms, but analysts expect to see little improvement from February industrywide. That's despite a record level of incentive spending by automakers last month, according to Edmunds.com.
The average incentive on vehicles sold last month was $3,169, up 30 percent from a year earlier, the car buying Web site said. General Motors and Hyundai Motor spent more on incentives than they ever have, while Ford said its incentive spending was the same as a year ago.
GMAC TO WORK WITH SUBPRIME BORROWERS
Also Wednesday, GMAC Financial Services said it will resume making car and truck loans to subprime borrowers and will lower inventory financing costs for cash-strapped auto dealers, part of a series of moves intended to spur sales at GM
The moves announced Wednesday come as the embattled automaker races to restructure and get customers back into its showrooms amid growing risk that it will be pushed into bankruptcy by the Obama administration.
GM, whose U.S. sales plunged 51 percent in the first two months of this year, also began rolling out a program that will cover some payments for customers who lose their jobs after buying a car, an incentive intended to bring back shoppers worried about job security amid the recession.
GMAC, which provides financing to many GM vehicle buyers, said it would make at least $5 billion of credit available to customers over the next 60 days, a period during which GM has to prove to U.S. officials it can win sweeping concessions from bondholders and its major union.
The finance company plans to resume accepting finance applications from car and truck buyers who have credit scores below 620, a line dividing prime borrowers from less creditworthy subprime borrowers. The median U.S. credit score is 723, according to Fair Isaac's
GMAC also will cut borrowing costs for some new and used vehicle purchases.
Reaching Out to the Unemployed
Both GM and Ford announced they would offer payment protection plans to help reassure consumers who may be putting off buying a new car because of worries about losing their job.
Dearborn, Mich.-based Ford said it will cover payments of up to $700 each month for up to a year on any new Ford, Lincoln or Mercury vehicle if consumers lose their jobs. The program runs until June 1.
Under GM's program, the company will make up to nine car payments of $500 each for customers who have lost their jobs through no fault of their own. An increasing number of businesses in the United States, both from the auto industry and elsewhere, are throwing a lifeline to the unemployed as they try to jumpstart sales.
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Customers must qualify for state unemployment to be eligible. The program starts runs until April 30.
Hyundai Motor launched a program in January that allows buyers to return a vehicle within a year if they can't make the payments due to a job loss or disability. It later expanded the program with an offer to pay a customer's lease or loan payments for three months while they look for a job.
Hyundai credited the program with helping it avoid a double-digit sales decline last month.
- Reuters and AP contributed to this report.