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Last gasp for auto boom?
June 1, 2000: 1:10 p.m. ET

Many automakers report strong U.S. sales in May but see speed bumps ahead
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NEW YORK (CNNfn) - The party may finally be over for Detroit's Big Three carmakers.

After ripping up the road over the past two years, General Motors, Ford and DaimlerChrysler hit a speed bump in May as higher interest rates and a slowing economy combined to slow down sales.

General Motors Corp., the world's leading automaker, and U.S.-German automaker DaimlerChrysler saw U.S. sales fall below strong levels set a year earlier, although GM is still at record year-to-date levels for truck sales.

Import automakers fared better, but saw the pace of sales slow from recent months. Honda's U.S. operations, Germany's Volkswagen and Audi and South Korea's Hyundai all posted gains.

"The industry is starting to see some moderation from the blistering sales

pace we've seen in recent months," said Bill Lovejoy, group vice president of

North America Vehicle Sales, Service and Marketing. "However, the pace of sales remains very robust. At GM, the quality of our share and mix continues to strengthen as we profitably grow share in our core vehicle segments."

But even some of those posting gains said they believe that the boom that saw record vehicles sales the last two years may be running out of gas.

"The seasonally adjusted annual (industry-wide) sales rate in the last six months has exceeded 18 million," said Bob Rewey, a Ford group vice president. "Going forward, we anticipate that consumer demand will moderate in response to higher interest rates. Still, consumer confidence remains high and that bodes well for healthy auto sales."

Officials at General Motors, which saw President G. Richard Wagoner Jr. become the youngest chief executive in the company's history Thursday, echoed Ford's view of the industry's outlook. But the stronger truck sales should help its competitive position, according to the company.

Analysts agree that the industry will be hard-pressed to top last year's record or maintain the current pace of sales.

"I think the auto industry and the economy at large are inseparable," John Casesa, auto analyst for Merrill Lynch, told CNNfn Thursday morning. "An increase in the cost of money is going to slow down big ticket purchases, and it's inevitable that is going to hit auto sales. I think that's what we're beginning to see in May." (461KB WAV) (461KB AIFF)

Still Casesa and other analysts believe that auto sales should still remain strong throughout the year, even with a cooling of the market.

"For a full-year basis we're looking at sales basically being flat this year versus where they were last year," David Garrity, auto analyst with Dresdner Kleinwort Benson, told CNNfn's Ahead of the Curve. "But we're still staying at a fairly high rate."

GM daily sales off

GM saw U.S. average daily vehicle sales fall 5.8 percent, as it sold 455,868 vehicles in the month.

The company sold 226,610 trucks in May, 2.9 percent less than for the same period a year ago, but also its second-best May truck sales figure. For the first five months of the year, GM reported an 11.9 percent increase in truck sales.

Sales of GM's Cadillac Escalade rose 32 percent and GM's all-new utilities also posted strong showings with sales of the GMC Yukon XL rising 34 percent, the Chevrolet Tahoe up 33 percent and the GMC Yukon rising 21 percent. Consumers also bought 60,000 Chevrolet Silverados, marking the 10th consecutive monthly record, the company said.

Total car sales fell 8.5 percent to 229,258, but the number of mid-size cars, a core vehicle segment, rose 6 percent.

graphicSales of the Pontiac Bonneville, Chevrolet Malibu and Buick Century also increased in May.

In addition, Chevrolet Impala and Saturn L-series cars posted strong sales and the Oldsmobile Aurora lead the luxury segment with a 32 percent increase in sales.

Ford sales up, but slowing

Ford's overall vehicle sales rose 1.4 percent on a per-day basis from a year earlier, to a record 416,660 vehicles sold.

Daily U.S. car sales slipped 1.5 percent in the month, although an extra selling day caused total sales to rise slightly to 172,692. A drop in sales at its Mercury brand was mostly responsible for the decline. Daily truck sales gained 3.5 percent, with total sales hitting 243,968.

For the first five months of 2000, overall sales rose 7.6 percent from the 1999 period to 1.9 million. Car sales at Ford advanced 14.9 percent, while truck sales gained 4.1 percent.

The company attributed the increase chiefly to the introduction of new models in the Jaguar, Lincoln and Volvo line as well as sales of the Ford Excursion, Focus and other mainstays such as Taurus, Mercury Sable, Ford Explorer Sport and the F-150 truck.

Sales of the new Ford Focus reached 26,050 and Lincoln sales rose 28 percent on the strength of the redesigned LS model.

Jaguar's May sales rose 20 percent over the year-ago figure to 4,012. The new S-type and XKR coupe and convertible bolstered sales. The division's year-to-date sales were up 96 percent.

Volvo's May sales rose 6 percent from a year ago to 11,779, driven by sales of the S40/V40 compact sedan and wagon.

Shares of Ford (F: Research, Estimates) edged up 15/16 to 49-1/2 Thursday on the New York Stock Exchange.

DaimlerChrysler sales dip

German-U.S. automaker DaimlerChrysler (DCX: Research, Estimates), which reported an 18 percent drop in May sales late Thursday, announced a new incentive program Wednesday in an effort to spur sales. As of Thursday, Ford and General Motors (GM: Research, Estimates) hadn't responded to the new incentive program.

Although the Chrysler group's sales dipped nearly 20 percent below its record setting levels a year ago, the Auburn Hills, Mich.-based company, called sales of its PT Cruiser, which it reported for the first time, a success.

graphicThe company sold 5,366 PT Cruisers while sales of the Cirrus model rose 29 percent to 5,150 from 3,850.

"The PT Cruiser continues to be an incredible hit with the public and proves our theory that the key to long-term sales in this marketplace is to have the most exciting and innovative vehicles in the market," said Theodor Cunningham, DaimlerChrysler's executive vice president for sales and marketing.

However, sales of the Plymouth Voyager minivan, which is about to be updated, plummeted 91 percent from 15,955 to 1,523 and Plymouth Breeze sales dropped 87 percent from 3,711 to 494.

Sales of the Plymouth Neon, Chrysler Sebring Coupe and Sebring convertible all saw significant dips in sales.

Imports post gains

Meanwhile, American Honda posted a 3.6 percent increase from 98,158 to 105,774 vehicles sold. Light truck sales rose to 25,504, a 41.8 percent increase from the year-ago period.

The Torrance, Calif.-based company attributed the rise to increased sales of its Odyssey minivan, Acura RL, TL and the new CL models.

Honda Division sales rose 3.1 percent to 93,566 lead by Odyssey sales, which totaled 11,963. Sales in the Acura division rose to 12,208, an 8 percent increase from the 10,868 it sold in the year ago period.

Volkswagen of America Inc. sold 33,074 new cars in the U.S. in May, an 11.3 percent increase over the 29,704 it sold during the same period a year ago.

For the year-to-date, the Auburn Hills, Mich.-based manufacturer, said it sold 146,241 new cars, a 22 percent increase from the 119,855 it reported for the same period last year.

Audi of America also reported an increase in U.S. sales for May of 27.6 percent from 5,459 to 6,963. For the first five months of 2000, sales rose 48.7 percent to 33,471 compared with 22,510 a year ago.

And Mitsubishi Motors reported May sales of 29,390 vehicles, a 31.23 percent rise from the 22,384 vehicles it sold in the year-ago period and beating the previous monthly sales record of 28,090 set in November, 1999.

Galant, Montero Sport and Mirage all posted increased sales.

Hyundai Motor America also reported strong U.S. sales with a 52 percent increase over the year-ago period. May sales totaled 23,484, led by the Elantra, which had sales of 10,304 units.

Toyota and Nissan also reported increased sales for the month. Back to top


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