DETROIT – General Motors Corp. (GM) and Ford Motor Co. (F) on Tuesday reported lower U.S. vehicle sales for February, forcing them to cut production as they lost more market share to foreign rivals.
GM and Ford, which both started the year with swollen inventories of unsold cars and trucks, were both hurt in February by double-digit declines for many of their mid- and full-sized sport utility vehicles.
The segment has suffered from high U.S. gasoline prices, as well as growing competition from car-based or so-called crossover SUVs, analysts say.
Overall, analysts said industry-wide sales of new cars and trucks fell only slightly during the month, from a seasonally adjusted annual rate of 16.5 million in February last year.
GM, which was also hurt by disappointing car sales, said it sold 309,375 new vehicles in February, down 13 percent over the same month a year ago.
"The bottom line for us is February was a tough month," said Paul Ballew, executive director of global market and industry analysis at GM. "I would describe February as disappointing and below our expectations."
GM's slump prompted it to cut planned North American production, already down about 9 percent, by another 3 percent. The world's largest automaker also said it planned to build 1.25 million vehicles in North America in the second quarter, down about 10 percent from output in the year-earlier period.
Lower output is almost certain to hurt GM's financial results since automakers book profits on vehicles when they are shipped from factories and not when they are sold on dealership lots.
Ford, the second-largest U.S. automaker, said February sales dropped 3 percent, as stronger sales for its new car lineup helped offset an 11 percent drop in sales of its key F-Series pickup trucks and a 19 percent fall in sales of the popular Ford Explorer SUV.
Ford, which posted its ninth consecutive drop in monthly U.S. sales, said it was cutting first-quarter North American production by another 10,000 vehicles, or just under 1 percent. It also said it would produce about 940,000 cars and trucks in North America in the second quarter, down 1.2 percent from the second quarter last year.
The production cuts came a day after Banc of America Securities analyst Ron Tadross cut his rating on GM and Ford shares to "sell," citing continuing erosion in the automakers' market position.
Tadross also warned things would get worse for the automakers if their credit ratings, currently hovering just one notch above "junk" status at Standard and Poor's, are cut to noninvestment grade.
"The share loss repercussions could be more widespread," Tadross said in a note to clients.
Chrysler was the only Detroit-based automaker to avoid losing U.S. market share last year, as it was buoyed by the success of new products including its brassy 300 series sedan.
The U.S. unit of DaimlerChrysler AG (DCX) posted an 8 percent gain in February sales, leaving its cross-town rivals in the dust.
Toyota Motor Corp. said February sales rose 11 percent, meanwhile, boosted by strong results for its redesigned Avalon sedan and a 120 percent surge in sales of its gas-electric Prius hybrid mid-size sedan.
"As gas prices continue their upward march, fuel efficiency catches the public eye," Jim Press, vice president and chief operating officer of Toyota's U.S. sales arm, said in a statement.
Bucking the trend at GM and Ford, sales of Toyota's full-size and gas-thirsty Tundra pickup truck were also up sharply, however, posting a nearly 50 percent rise over February last year.
Other big gainers for the month included Korea's Hyundai Motor Co. Ltd., which saw sales jump 19 percent, and Nissan Motor Co. Ltd., Japan's second-largest automaker, which reported a gain of about 10 percent in February sales.