February was a tough month in the world of auto sales for both foreign and domestic car manufacturers. Ford Motor (NYSE: F), General Motors Corporation (NYSE: GM) and Toyota Motor Corp. (NYSE: TM) all saw their sales figures shrink during another tough month.For Ford, it was a really tough month, with the struggling auto maker showing a drop of 7% during the month. Toyota was slightly better, and only witnessed a 3% drop in the month. Toyota was hit hard in its luxury car division, with sales of its highly popular Lexus LS 460 sedan dropping by a startling 25%. Overall, Toyota saw its car sales drop by 4%, with truck sales coming in flat.
For Ford, not only were investors treated to the weak sales figures, but the company also announced that it was going to be cutting back on its shifts in three of its factories, as well as lowering its 2008 production estimates by a pretty hefty 10%. Looking at its individual vehicles lines, Ford saw a 9% drop in its car sales and a 5% shrinkage of truck sales. The drop in demand is leading to the cut backs at its factories, and the factories that will be affected will be plants in Chicago, Louisville, Ky., and Cleveland.
The entire auto industry has been going through some tough times lately, as consumers continue to pull back on auto purchases out of fear of a possible recession and falling home prices.
General Motors Corporation (NYSE: GM) also saw a decline in sales during the month. GM saw its light vehicle sales plummet by 12.9% during the month, with auto sales dropping down to 268,737 from 308,411 in the same month last year. Looking at production estimates, GM continues to hold firm to its estimate of 965,000 during the current quarter.
With recession fears, housing market concerns, and soaring gasoline prices auto makers definitely have their work cut out for them in the months ahead. It is not going to be easy to overcome the obstacles that have been laid out for the industry.
What does this mean for auto buyers out there? It means, simply, that we are moving into a buyers market. A recent trend of auto makers moving away from offering high incentives is reversing. Compared to this time last year incentives have moved 8.9% higher as car dealers are doing whatever it takes to pull buyers into the lots. Incentives may be good for sales figures, but it definitely cuts into the profit figures.
Just how much are the big boys spending on incentives? Here is a quick run down of what they are spending on incentives per vehicle:
- Chrysler = $3,579
- General Motors = $3,315
- Ford = $3,297
- Nissan = $2,159
- Honda & Toyota = $1,000
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
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Reader Comments (Page 1 of 1)
3-04-2008 @ 2:04AM
Henry Salzer said...
Over 3 weeks ago, I responded to an advertisement delivered to my home. It was from Car Pros KIA at 21243 S. Avalon Blvd, Carson, Ca. I almost ended up been one more victim from the illegal malpractice of BAIT and SWITCH. The advertisement called up for a total saving of almost 4650.00 dollars. I went to the dealership and asked about that particular vehicle for that price. They said, Yes we have that. My family and I drove the brand new 2007 KIA Sportage and we started the paperwork. I was willing to pay 50% cash and the rest to be paid in no more than 6 months. When I received the paperwork to sign, it was overpriced for more than 10,000.00. My credit score is very, very good. After almost 3 hours at the dealership, I was so frustrated with this dealer because they did false advertise real savings, when in reality I (as a consumer) had to pay double the advertised price for the exactly same vehicle. I still have tha advertisement at home. With this kind of fraudulent advertisement, I decided not to get rid of my old vehicle and NOT to buy a new one. I'm not going to give away more than 10,000.00 dollars to this people. Few days ago, I received a letter from Mr. Juan Alarcon, General Sales Manager, thanking me for my recent interest in buying a vehicle from his dealership. Somebody shall regulate this illegal practice because the dealer promised something that they were not willing to deliver.
3-04-2008 @ 2:18AM
Henry Salzer said...
Over 3 weeks ago, I responded to an advertisement delivered to my home. It was from Car Pros KIA at 21243 S. Avalon Blvd, Carson, Ca. I almost ended up been one more victim from the illegal malpractice of BAIT and SWITCH. The advertisement called up for a total saving of almost 4650.00 dollars. I went to the dealership and asked about that particular vehicle for that price. They said, Yes we have that. My family and I drove the brand new 2007 KIA Sportage and we started the paperwork. I was willing to pay 50% cash and the rest to be paid in no more than 6 months. When I received the paperwork to sign, it was overpriced for more than 10,000.00. My credit score is very, very good. After almost 3 hours at the dealership, I was so frustrated with this dealer because they did false advertise real savings, when in reality I (as a consumer) had to pay double the advertised price for the exactly same vehicle. I still have tha advertisement at home. With this kind of fraudulent advertisement, I decided not to get rid of my old vehicle and NOT to buy a new one. I'm not going to give away more than 10,000.00 dollars to this people. Few days ago, I received a letter from Mr. Juan Alarcon, General Sales Manager, thanking me for my recent interest in buying a vehicle from his dealership. Somebody shall regulate this illegal practice because the dealer promised something that they were not willing to deliver.
3-04-2008 @ 3:38PM
jpdr1100 said...
Notify your state's Attorneys General and the local BBB.
And send a letter to Kia USA.
3-04-2008 @ 6:15PM
gumby said...
It is not just another tough month for GM and Ford, it can be last one for them. We dont know how much longer GM and Ford can hold out while losing money and market share... There is a cut off date somewhere down the road... Yet, more and more of us think we are smarting up after being sick and tired of taking GM and Ford cars to dealers for repairs. so we buy Toyotas and HOndas instead and be happier then. Well it is not just a routine boom and bust cycle for GM and Ford. it can be the last downcycle for them... Is any of you sure that it is prudent to buy a Toyota or Honda this year at least?? Or should we help GM and Ford and their shareholders out a bit for next few years until they are back on their feet before we can resume our freedom of choice among cars...
3-05-2008 @ 11:48AM
jpdr1100 said...
Gumby, your sentiment of throwing Detroit a break might make some sense if they hadn't gotten themselves into this pickle by years of ignoring the need for higher MPG vehicles. Did they forget what happened when oil was shut off twice in the 1970s? Did they forget that fuel economy was what first got people into Japanese cars?
Instead of developing ever-larger SUVs, if they had instead developed the 80 mpg sedan that we taxpayers paid them to do, they'd be sitting pretty today.
3-07-2008 @ 11:14PM
glen said...
I gave gm. a break buying 4 new problem vehicles everytime i turned around i had to take one of them back(motor ,trans,water leak,falling apart etc.) called gm they didn't even want to hear anything all they did was make excuses why they coun't help me. bought a new nissan and its been a whole experince ,Its two years old and never had any problems with it. maybe if gm cared about its customer maybe the woudn't be in trouble. I finaly got a vehicle i enjoy and reliable and can get 200,000 miles or more from it.