Auto sales plunge, but outlook improves
Chrysler's sales sink 48% in April, GM reports 33.2% decline, while Ford outpaces Toyota's monthly sales for first time in 2 years.
NEW YORK (CNNMoney.com) -- U.S. auto sales plummeted again in April, but automakers said conditions were stabilizing and that the market is getting closer to a recovery.
Overall industry sales tumbled 34% during the month, according to sales tracker Autodata. While that's worse than the 30.8% decline predicted by Edmunds.com, it is slightly better than the 37% drop that occurred in March.
"We're at the bottom, and we're poised for U.S. vehicle sales to start rising," said Mike DiGiovanni, head of sales analysis for General Motors, on a conference call with analysts and media. "The overall talk of GM and Chrysler is affecting [the] industry, but we expect a modest rise in sales in the second half of year."
General Motors, Ford, Chrysler, Toyota, Honda Motor and Nissan all said Friday that April sales tumbled at least 25% from year-ago levels. With the exception of Toyota and Chrysler, the pace of April's declines were not as steep as the previous month.
The seasonally adjusted annual sales rate, or SAAR, fell to 9.32 million vehicles, down from a pace of 9.86 million in March. That number is a bit disappointing, given that analysts had expected the rate to rise to 10 million vehicles. The 10 million figure is significant because sales slipped below that level for the first time in 26 years in January.
On the upside, auto sales typically ease from March to April and most automakers said they were seeing enough positive signs to signal an imminent recovery.
DiGiovanni cited pent-up demand from customers waiting on the sidelines as one reason for a looming boost in sales. Furthermore, he noted that used car prices are climbing, making new car deals more attractive.
Emily Kolinski Morris, Ford's senior U.S. economist said Ford also anticipates a second-half recovery in vehicle sales, as Ford has noticed an uptick in customers opting for more content and features in cars, rather than scaled-down cheaper models.
Even Chrysler, which filed for Chapter 11 bankruptcy protection Thursday, said the market has reached a bottom.
"The industry appears to have stabilized, as it's been fairly level for the past four months," said Jim Press, Chrysler LLC president. "We know where the bottom is and, as the economy struggles to recover, vehicle sales should follow."
Industry analysts said they are afraid to declare a bottom in auto sales, especially since Chrysler's bankruptcy could hurt buying sentiment. But experts say consumer confidence is improving, and they credit government efforts such as the so-called cash-for-clunkers program, which was introduced in January, for an increase in sales.
The legislation encourages the purchase of more fuel-efficient cars. Consumers with old, gas guzzlers could get $1,500 to $5,000 vouchers funded by the government to use toward the purchase of new cars.
"The industry is slowly picking up much-needed momentum but there is still a lot of risk," said Jesse Toprak, director of industry analysis for Edmunds.com. "[A lot] depends on how consumer confidence is affected."
GM: General Motors Corp (GM, Fortune 500)., the largest U.S. autoseller, reported that light vehicle sales fell 33.2% from year-ago levels, to 172,150, besting Edmunds.com's forecast of a 36% drop. Sales were much improved from the 45% decline in March.
Its four brands which will be dropped in a restructuring of the company - Pontiac, Saturn, Saab and Hummer - each reported much bigger sales declines than GM's overall drop, the worst being a 62% plunge in Hummer sales.
Precipitous auto sales declines in the past two years exacerbated the problems in the auto industry, especially for GM and fellow U.S. automaker Chrysler. GM has said that it will be forced into bankruptcy at the end of the month if its bondholders do not agree to forgive the debt owed to them in exchange for company stock.
Chrysler: Chrysler, which officially entered Chapter 11 bankruptcy on Thursday, said its sales fell by a much worse-than-expected 48% last month, compared with analysts' expectations for a 39.2% drop. That's also much worse than the 39% year-over-year decline in March.
The company, which is ending its employee incentive program this weekend, said that it would offer new incentives, starting May 5. Though few details were made available, the automaker plans to offer a mix of consumer rebates and customer loyalty certificates, as well as a continuation of its lifetime powertrain warranty program.
Chrysler also said it would unveil a new advertising campaign this weekend to encourage customers to buy Chrysler vehicles despite its bankruptcy. The full-page ads will debut in major newspapers beginning Saturday, and will say, "We're building a new car company. Come see what we're building for you."
Ford outsells Toyota: Ford Motor Co. (F, Fortune 500) reported a 31.6% drop in sales from a year ago and its declines were broad based. That was a steeper decline than analysts' forecast of a 27.2% drop but better than the 41% retreat in March.
Toyota (TM) also reported worse-than-expected sales, falling 41.9% year-over-year in April, compared to expectations of a 40.2% decline. April's slipping sales outpaced the 39% drop the company registered in March.
The 129,898 vehicles sold by Ford's domestic brands in April outpaced Toyota's 126,540 sales. It was the first time Ford outpaced Toyota's monthly sales since April 2007.
Though most of Ford's car models fell by more than 23%, sales of its mid-sized Fusion model actually rose by 21.7% last month, buoyed by the new hybrid version of the car.
Other automakers: Honda (HMC) reported a 25% decline in April sales, better than the 26.9% forecasted by Edmunds.com. Nissan's sales fell 38%, much worse than analyst's prediction of a 27.3% decline.