I noted on Friday that American auto maker Ford (NYSE: F) was predicting that December would be a tough month for automakers across the board. It forecast around a 30% drop in sales during the month. Indeed, the numbers that actually came in this afternoon showed sharp drops in December sales for all the major automakers.Chrysler took the biggest hit of the majors, as its December sales dropped by a massive 53%, and on the whole, it saw 2008 sales drop 30% compared to what it was able to sell during the 2007 year.
Of course, the main culprits to the sales drop are nothing new to us at this point: falling consumer confidence, tightened credit lending, and increased unease over rising unemployment. It is just not a seller friendly environment for the auto makers at this time.
Ford, which is arguably in the best position of the Big 3 American carmakers, had a monthly decline of 32%, and the other big American company, General Motors (NYSE: GM) did not do much better, with a 31% decline in its December sales.
With the economy in the shape that it is in, no one was safe from the sales slowdown, and America's big competitors from Japan also were hit pretty hard. Toyota (NYSE: TM) sales fell by 37% and Honda (NYSE: HMC) saw a decline of 35% in its sales for the month.
Not all of the companies have released figures for full year sales yet, but Ford announced that its total annual sales were off by 21%, which will put it in third place behind General Motors and Toyota for the second straight year. Looking ahead, Ford believes the first quarter of 2009 is going to be much of the same as what we have seen, but the company is optimistic that the market will start to turn around towards the end of the year.
Following my post last week discussing Ford's views on the first quarter of '09, I received some feedback from Scott Monty, Ford's Global Digital Communications Department. According to Mr. Monty, Ford is excited and looking forward to the new year as the company believes it is going to benefit from "product lineup, the arrival of European-platform cars in the U.S., the wide distribution across the fleet of fuel-saving technology (like the EcoBoost engine and 6-speed transmissions), and a more balanced product portfolio (60% cars/crossovers vs. 70% trucks/SUVs as in 2006)."
So, another tough month, which everyone expected, but hopefully we are getting closer to a bottom for the ailing industry.
Special thanks to Scott Monty for contributing to our auto industry discussion.
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)
1-05-2009 @ 7:17PM
don said...
Anyone seen any of the adjustments that were promised to get the money?
1-05-2009 @ 7:20PM
Scott Monty said...
Michael, thank you for drawing attention to my comments last week. That's really great that you'd think enough of them to include them in a post.
Even though the sales figures were down, we managed to come out ahead of our foreign competition. In addition, Ford managed to gain 0.7% market share at the same time - our third straight month of market share growth.
These are tough times, but as I said earlier, we're focused on what's ahead. Next week at NAIAS (the North American International Auto Show), we'll be revealing some new vehicles and this week at CES (the Consumer Electronics Show), Alan Mulally will be giving a keynote. Between the two events, people will be able to see that Ford is committed to advancing as a global, green and hi-tech company.
Scott Monty
Global Digital Communications
Ford Motor Company
1-05-2009 @ 11:06PM
Robert said...
Perhaps a more apt title would be "as expected, the industry really sucked in December." If I did my numbers right, GM and Ford were actually "winners" in December (if such words can be used right now), gaining marketshare. And although I can't speak for GM's numbers, Ford posted that declines in fleet sales were far steeper than declines in retail (which means Ford lost an even lower % of regular Joe's).
I think the most interesting fate of all the automakers is Toyota. They are running incentives that are around 30% higher than a year ago (average industry spend is up about 10-15%) and yet, their marketshare deteriorates.
I agree with Ford's forecast: Q1 is going to be bad. I think it will be even worse for Ford and probably Honda as they may resist the urge to push discounts due to their more tightly controlled inventories at this point. I suspect both GM and Toyota will be doing some barn-burners to get rid of excess inventory of some particular models.
We'll see if Chrysler makes it through the quaerter.
1-06-2009 @ 8:49PM
John said...
I am going to throw a party when GM and Chrysler go bankrupt. Somebody needs to explain why people in the South are paying taxes to support rust belt industries.
If GM and Chrysler were building quality products and selling products at a reasonable price, they would not be begging for tax dollars to stay in business. If the UAW members had confidence in GM, they would have loaned money from their retirement trust fund to help the company. If the new owners of Chrysler had any faith in their company, they would have found more money in their off-shore accounts to carry the company through this storm.
The UAW members have destroyed the American automobile industry and now they want tax dollars to line their pockets. In some circles, that would be called extortion.
1-15-2009 @ 5:25PM
roy vier said...
the decline in the auto industry is not only the high union labor costs and executive exceptionally high bonuses and salary, but the $140 + for a barrel of oil. so in my opinion, unions, oil costs and the auto industry itsself point to greed being the primary causes of the auto industry problems. greed also is the reason for the financial failures and most of our problems are because each of our entities have out grown (got too big) for their managers to manage. these bigwigs in charge think they deserve an out of line salary and to top that off they want the big bonuses even when they are the primary cause of their companies are going into the bankrupt status.