Auto Sales Decline and Production Cuts Follow, Edmunds.com Forecast Says
August 30, 2007

Not surprisingly, based on the latest dreary economic news, August vehicle sales will be down, according to Edmunds.com’s forecast. Automakers report sales Tuesday.

Industry vehicle sales, including retail and fleet, are expected to be 1.42 million units, a 4.5 percent decrease from August 2006 and an 8.7 percent increase from July 2007. Big Three share is predicted to be below 50 percent for the second consecutive month.

"Early in August, sales were dismal," observed Jesse Toprak, Edmunds' executive directory of Industry Analysis.

"To generate showroom traffic, most automakers introduced incentives programs midway through the month," added Toprak. “That effort was relatively successful."

Still, noted Toprak, the uncertainty in the housing market is likely to continue suppressing consumer demand for new vehicles for some time.

The combined monthly U.S. market share for Chrysler, Ford and General Motors domestic nameplates is estimated to be 49.6 percent in August 2007, down from 53.5 percent in August 2006 but up slightly from 49.4 percent in July 2007.

Automakers in Detroit are quietly wondering how bad it is going to get -- and whether the picture will improve in 2008. Executives will be facing some tough decisions, given the economic trends and the impending union contract negotiations.

Indeed, GM already is making some tough decisions regarding production. On Wednesday, it announced more production cutbacks. Thursday’s edition of Toronto’s Globe and Mail reports GM has cut its third shift and about 1,000 jobs -– a third of the workforce -- at its pickup truck plant in Oshawa, Ontario, because of slowing sales of its Chevrolet Silverado and GMC Sierra pickup trucks. Last week, GM eliminated all overtime at North American plants that make pickups and SUVs.

Edmunds.com predicts GM will sell 330,000 units in August 2007, down 9.5 percent compared to August 2006 but up 4.4 percent from July 2007. GM's market share is expected to be 23.3 percent of new vehicle sales in August 2007, down from 24.6 percent in August 2006 and down from 24.2 percent in July 2007.

Meantime, Ford is expected to announce next week its production plans for the last months of the year; Ford is likely to scale back its original production plans.

Edmunds.com forecasts Ford will sell 211,000 units in August 2007, down 15.6 percent compared to August 2006 and up from 10.9 percent from July 2007. This would result in a market share of 14.9 percent of new car sales in August 2007 for Ford, down from 16.8 percent in August 2006 but up slightly from 14.6 percent in July 2007.

Similarly, Chrysler will sell 163,000 units in August 2007, down 9.2 percent compared to August 2006 but up 18.1 percent from July 2007, according to Edmunds’ forecast. This would result in a new car market share of 11.5 percent for Chrysler in August 2007, down from 12.1 percent in August 2006 and up from 10.6 percent in July 2007.

Meanwhile, the major Japanese players are expected to show sales increases. Edmunds forecasts:

* Honda will sell 160,000 units in August 2007, up 5.6 percent from August 2006 and up 13.3 percent from July 2007. Its market share is expected to be 11.3 percent in August 2007, up from 10.2 percent in August 2006 and up from 10.8 percent in July 2007.

* Nissan will sell 93,000 units in August 2007, up 3 percent from August 2006 and up 5.3 percent from July 2007. Nissan's market share is expected to be 6.5 percent in August 2007, up from 6.1 percent in August 2006 and down slightly from 6.7 percent in July 2007.

*  Toyota will sell 245,000 units in August 2007, up 1.9 percent from August 2006 and up 9.2 percent from July 2007. Toyota's market share is expected to be 17.3 percent in August 2007, up from 16.2 percent in August 2006 up slightly from 17.2 percent in July 2007.

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