By ,
Published January 13, 2015
Higher gas prices cut into demand for sport utility vehicles and trucks in May, depressing U.S. market share for the Big Three Detroit-based automakers and prompting production cuts at General Motors Corp. (GM) and Ford Motor Co. (F).
GM, the world's largest automaker, posted a 16 percent slide in monthly sales, while Ford reported a 6 percent drop. Chrysler Group's (DCX) sales fell 11 percent before adjusting for the extra selling day last month compared to a year earlier.
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By contrast, Japan's Toyota Motor Corp. (TM) and Honda Motor Co. Ltd. posted record sales for May, gaining 12.3 percent and 11.4 percent, respectively. Both cited booming sales of passenger cars and a boost from increasing U.S. consumer concern over fuel economy.
"The overall industry in May was dampened by rising fuel prices and interest rates," Mark LaNeve, GM's North American chief of sales and marketing, said in a statement.
GM saw sales of both cars and trucks decline as it held back on consumer incentives and curbed unprofitable sales to daily-rental car companies.
U.S. automakers, which have relied on sport utility vehicles and large cars to generate profits, have been hit by consumers looking to downsize their vehicles from SUVs to smaller and mid-sized cars, a segment dominated by Japanese automakers.
Toyota-branded passenger cars rose almost 20 percent in May, including a record sales month for Toyota's Corolla sedan. Honda saw a 16 percent increase in its car sales.
GM and Ford, both struggling to slash costs and payrolls, pointed to sales gains for most of their new vehicle models.
Ford's May U.S. sales decline was more limited than most analysts' estimates because of increased demand for the automaker's new cars, including the popular Mustang and Fusion sedans.
GM said sales of its new vehicles -- including the Chevrolet Tahoe, Impala, HHR and Cobalt -- accounted for almost a quarter of its total sales in May.
PRODUCTION TARGET CUTS
GM's Ballew estimated that sales for the auto industry overall had weakened to a seasonally adjusted annual rate of 16.1 million units in May, down from 16.7 million last month and 17.7 million last year.
Following the drop in sales, GM and Ford set third-quarter production targets that were lower than year-ago levels.
GM said it would build 1.05 million vehicles next quarter, down 8.4 percent from the previous year. Ford plans to build 710,000 vehicles in the July-September period, down 2.5 percent. Ford's production cuts were all in the truck segment.
Production levels are a closely watched barometer because U.S automakers book profits on vehicles when they are shipped from assembly plants, not when they are sold at dealer lots.
In a bid to boost sales, Ford began offering zero-percent financing on almost all of its vehicles and giving buyers $1,000 toward gasoline purchases. It is one of Ford's most aggressive incentive programs since the industry began relying heavily on such discounting in 2001.
Ford's offer to subsidize gas purchases for car buyers upped the ante for Chrysler and GM, which offered a similar but more limited program earlier this month in Florida and California.
"We're assessing it. We're looking at it," GM's Ballew said. "Nothing tells us we have to follow them lock-step."
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https://www.foxnews.com/story/gm-ford-sales-slip-in-may-toyota-u-s-sales-up