Ford U.S. Sales Drop for 12th Straight Month

DETROIT – Ford Motor Co. (F) reported its 12th straight month of lower U.S. vehicle sales Wednesday, as high gasoline prices and flagging demand for its fuel-thirsty sport utility vehicles cost it more market share that went to Asian rivals.

The sales slump, Ford's longest in recent memory, casts another shadow over Detroit's struggling automakers as they grapple with brutal competition and the impact of last month's credit rating downgrades to "junk" status.

Both Ford and larger rival General Motors Corp. (GM) have been losing U.S. sales even as more nimble Asian manufacturers, led by Toyota Motor Corp. (search) , report strong gains.

Nissan Motor Co. Ltd. (search) , Japan's second-largest carmaker, said its May sales rose 15.5 percent, a new record for the month.

Ford's May sales fell 3 percent. All sales figures are adjusted for two less selling days in May of this year and exclude the automaker's foreign brands.

Because of weak sales, Ford said its third-quarter North American vehicle production would be about 2 percent lower than last year. Quarterly production of Ford's high-profit trucks will be down about 6 percent year-over-year, however.

Ford has already cut its second-quarter production by 5 percent. The cuts help reduce swollen inventories of unsold cars and trucks. But lower output also has a direct impact on earnings, since automakers book profits on vehicles when they are shipped from assembly plants, not when they are sold at dealerships.

GM was also expected to report lower U.S. sales later Wednesday and weaker sales were a driving force behind the $1.1 billion loss it reported in the first quarter, its worst result since 1992.

Both GM and Ford have relied on mid- and full-sized SUVs as profit engines since the late 1990s. But those vehicles, especially from the aging lineups offered by GM and Ford, have become less attractive as gas prices hover at near-record highs.

Even Ford's compact Escape SUV model suffered a double-digit decline in May sales.

In a bid to boost their results, GM and Ford both said they would be offering steep new consumer incentives in June. GM has led the U.S. auto industry's profit-gouging price war ever since the Sept. 11, 2001, attacks on the United States.

Analysts said U.S. vehicle sales across the industry probably weakened to a seasonally adjusted annual rate of 16.5 million to 16.6 million in May. That would be down considerably from a rate of 17.4 million in April and 17.7 million in May last year.

In addition to higher gas prices, analyst David Healy of Burnham Securities said the overall weakness may be partly due to higher car loan rates and rising car prices.

In a lone bright spot for Detroit Wednesday, DaimlerChrysler's (DCX) U.S.-based Chrysler division said its U.S. sales were up 6 percent in May.