February Sales Leave Automakers Trying To Find the Bottom
March 04, 2008

By Dale Buss and Bill Visnic

February was an awful sales month for the U.S. auto market. If the industry isn’t in its own recession against the backdrop of general economic uncertainty, it’s surely looking for the bottom.

Overall sales dropped by 6 percent compared with February 2007, following a year-over-year decline of 4 percent in January. The pace represented a seasonally adjusted annual rate of 15.5 million to 15.8 million vehicles, General Motors said. In the first two months of the year American consumers bought about 2.2 million cars and trucks, or about 126,000 fewer than in 2007.

"Traffic was soft, business was tough all month,” said Mark LaNeve, GM’s vice president of North America vehicle sales, service and marketing. “Consumer confidence — or lack thereof — came into play.”

Reflecting the sobering reality that the U.S. economy has entered a pronounced slowdown, Ford announced a 10 percent cut in production for the second quarter of this year, mostly in its Taurus sedans and Explorer SUVs, down to a total of 730,000 from the 811,000 vehicles it produced in the second quarter of 2007. And GM said it plans to trim second-quarter production by 5 percent compared with last year, to 1.08 million vehicles.

Truck and SUV sales fell a combined 11 percent. “Light-truck sales are down as the housing market had a major impact on demand,” said Jesse Toprak, executive director of industry analysis for Edmunds.com. “Additionally, we’re seeing people shy away from midsize and large SUV purchases and moving to more fuel-efficient vehicles such as compact cars and crossovers.”

Indeed, sales of subcompact cars soared 33 percent, and car sales overall dipped just 1 percent.  “But those vehicles do not help manufacturers’ bottom lines,” Toprak said. “Manufacturers make most of their money from larger vehicles, which are heavily incentivized right now.”

Even luxury and near-luxury brands — often insulated during tough economic times — reported lower sales during February, including BMW, Audi and Porsche.

Some executives persisted in seeing bright spots. “This quarter is probably the trough of the downturn,” said Mike DiGiovanni, GM’s executive director of market analysis. Citing factors including the traditional uptick of selling in the spring, and the federal government’s upcoming tax rebate, he predicted a “pickup.”

But early 2008 is living down to executives’ broad expectations for a slow start to the year, following a disappointing end to 2007. The question now is whether sales truly will recover by the back half of the year, which also has been part of most of these forecasts. Sanguine voices have become rarer.

(Percentage comparisons, except where noted, are for the entire month of February, though there were 25 sales days this year because of February 29, and only 24 sales days last year.)

GENERAL MOTORS
General Motors reported a painful 13 percent sales decline in February, giving back its remarkable achievement from January — for which it had been the only one of the Big Six U.S. automakers to report a year-to-year sales increase. Year-to-date sales are down 6 percent.

But GM blamed its performance entirely on the general downdraft that was produced by lower industry sales and the shaky economy, noting its total retail-sales share held flat in January and February of this year, at about 23 percent of the U.S. market, the same as early 2007 and roughly in the ballpark of the last 2-1/2 years. End-of-February inventories of about 940,000 vehicles were GM’s lowest at the end of that month in 25 years.

In February, GM’s overall incentive spending remained about the same as January levels, LaNeve said. “Several competitors’ went up,” he noted, “a couple of them pretty significantly.”

The Good
Many GM cars sold pretty well, and GM is actually in short supply of some of them. End-of-February car stocks were 27 percent of GM’s overall inventories compared with 36 percent a year ago. Car sales were off only 1 percent in the month.

Recently launched cars led the GM highlight reel. The new Chevrolet Malibu notched February retail sales that were 62 percent higher than the old Malibu it replaced (though the high popularity of the previous version as a fleet vehicle held the new Malibu’s overall sales increase to just 7 percent).

The fuel-efficient compact Chevrolet Cobalt showed some spirit, posting an overall 56 percent increase and, according to LaNeve, a 24 percent boost in retail units.

The new Cadillac CTS also burst out of the gate, with a 71 percent gain in retail sales in February compared with a year earlier, and a 68 percent overall increase. CTS’s early momentum buoyed Cadillac overall. The division’s sales are up 5 percent year-to-date. For February, Cadillac reported a 2 percent overall sales increase, making it the only GM division in the black for the month — and one of the few luxury makes to post a February sales increase in the U.S. market.

Crossover vehicles fared relatively well, with GM’s overall crossover sales up 8 percent. Sales of Chevy Equinox — a nifty CUV that has seemed forgotten recently — surged by 15 percent in February and increased by 28 percent year-to-date. The Buick Enclave, Saturn Outlook and GMC Acadia together accounted for more than 11,000 sales in February, up 94 percent. Acadia led the results, with sales up 39 percent in February, although it was the model’s lowest sales month since August.

An ongoing strike by major supplier American Axle has begun to have a domino effect by shutting down some GM truck-assembly plants. But that’s just fine and dandy with GM sales executives — for now. The company is long on pickup-truck inventories. “We’re in great shape easy for the next 60 to 90 days,” LaNeve said.

The Bad
Most GM makes and models performed abysmally, especially trucks and SUVs. Sales of such vehicles declined by 19 percent. LaNeve cited a tough comparison for this February with February 2007, noting GM’s truck-market share was an unusually high 45 percent a year ago — and this year retreated to a “normal” level around 40 percent. “We continue to do really well sharewise,” he said, “but we’re running into difficult conditions.” GM raised its incentive spending on pickups by “a couple hundred dollars” in February compared with January, he said.

Sales by truck- and SUV-heavy GMC, for example, slid 20 percent in February, leaving sales off by 6 percent year-to-date. Hummer matched that percentage decline for February, leaving brand sales off 21 percent year-to-date. Chevy Silverado and GMC Sierra pickups were both down by double digits for February and the year so far.

Overall, the Chevy division outsold Ford division by only 1,251 units in February. Its sales were down 11 percent in February and declined 6 percent year-to-date.

Saturn sales slumped by 33 percent in February and 16 percent year-to-date. LaNeve cited two reasons. First, he said, Saturn buyers tend to be highly motivated by incentives, and the brand’s incentive levels last year — mostly on vehicles Saturn was phasing out — was much higher than it was this February. Second, Saturn’s new models are still filling in its lineup, providing some bad comparisons with February 2007. The new Astra sold only 500 units this year; the now-defunct Ion sold 3,500 a year earlier. Nevertheless, sales of the Aura sedan rose 60 percent on a retail basis in February.

FORD
Ford Motor Co. saw total sales — including those of Volvo cars, Land Rover and Jaguar cars that make up its slip-sliding Premium Automotive Group — down 7 percent, to 196,681 units versus 211,150 in February 2007.

Ford’s year-to-date total was off 6 percent from 2007.

Thus the production cut. Ford officials said the reduction is in line with previous sales projections for the U.S. market — and includes a significant 12 percent chop in truck and SUV production, a move justified by the huge sales drop for many Ford trucks, including a 27 percent February slide for the fading Explorer nameplate.

The Good
Like most others, Ford touted gains for small cars and crossovers, noting the 23 percent year-to-date sales jump for its restyled Focus compact car. Ford partly attributed Focus’ gain to the availability of its sophisticated and inexpensive new Sync system, which integrates control of numerous consumer electronic devices such as cell phones and iPods.

February sales of the Edge crossover jumped a significant 5 percent compared with last year, and the midsize Fusion also recorded a nice 13 percent gain.

The Ranger compact pickup — boosted by some effective regional incentives, said Jim Farley, Ford group vice president–marketing and communications — was the only Ford truck line (apart from Edge) to record a gain; Ranger boosted sales 27 percent in February and ran almost 24 percent ahead on a year-to-date basis.

The Volvo unit fared better than most brands in the month. Although February sales slid 11 percent versus last year, Volvo’s year-to-date deficit was just 4 percent.

The Bad
Not even the outsized gains from Focus, Edge and Ranger could shove Ford division sales into the black — and no Ford division gained overall in February. The Mercury and Lincoln divisions endured double-digit percentage drops — and perhaps most troubling, sales of the perennially best-selling F-Series line were down 5 percent in February and 7 percent year-to-date, ahead of a new ’09 model.

Ford’s PAG sales were no better, with Jaguar off a troubling 33 percent year-to-date, although total monthly sales for February did break the 1,000-unit barrier — a mark Jag couldn’t hit the prior month. The Land Rover unit, with nothing to push but thirsty luxury SUVs, also was down double digits, losing 13 percent to date and 9 percent in February, and was dragged down by a thunderous 65 percent year-to-date plummet for the LR3.

TOYOTA
Toyota’s sales declined 3 percent for February. That was a fraction of the percentage decline of its domestic rivals. And it was by comparison with a strong 2007, when the primary story line around Toyota was whether it had permanently surpassed GM in global sales.

But it’s still taking the company some getting used to. “Toyota was a victim of their own success,” said Edmunds.com's Toprak. “They had an exceptional year last year, so it’s going to be tough to beat last year’s expectations with the economic conditions we’re currently in.”

Indeed, this greater exposure to economic travails is the flip side of Toyota’s phenomenal success in picking up U.S. market share and in populating every significant niche with one or more models over the last several years. Even during the post-9/11 recession, Toyota wasn’t nearly as significant a presence in the pickup and SUV segments.

But now that those parts of the market are leading the 2008 sales decline, Toyota can’t escape the consequences. Year-to-date its sales were down 5 percent. Even December 2007 was a downer, with sales dipping 2 percent compared with December 2006.

The Good

A couple of stalwart car models helped Toyota limit the damage. Camry, the nation’s best-selling vehicle for several years running, held its own with a 4.3 percent increase (on a daily-sales-rate basis) in February, even better than its 3 percent year-to-date advantage. And sales of the tiny Yaris exploded, up 64 percent (on a daily-sales-rate basis) in February and 48 percent year-to-date. It sold only 1,135 fewer units than Prius, Toyota’s hybrid darling.

The Tundra pickup keeps gaining ground a little more than a year after its introduction into the rough-and-tumble segment that always has been dominated by the Detroit Three. And unlike Nissan’s counterpart Titan, Toyota’s entry is carving out a niche for itself. Tundra sales rose 43 percent in February (on a daily-sales-rate basis) and 62 percent year-to-date — albeit with the help of very un-Toyota-like, huge incentives.

The redesigned Highlander SUV is building momentum after a slow start, with sales up 8 percent in February (on a daily-sales-rate basis) over the old version sold a year ago, and 14 percent year-to-date.

The Bad
Prius may finally be experiencing significant price fatigue because of its high sticker prices — starting at about $21,100, according to Edmunds.com, compared with, say, $15,250 for the new Corolla. Sales fell 15 percent on a daily-rate basis in February, the lowest-volume month for Prius since January 2007. “People could be responding to economic concerns, preferring less-expensive cars than Prius — that still have good fuel economy,” said Jessica Caldwell, an Edmunds.com analyst.

Lexus is struggling, a major reflection of the increasing struggles of the upscale segment of the U.S. market. Its car sales decreased by 13 percent on a daily-rate basis. Lexus SUVs didn’t fare as badly, with sales decreasing by 4 percent.

Overall, the current market quicksand also means Toyota can’t just blow the doors off Ford in a decisive surge into a long-term No. 2 position in the U.S. auto market. Ford division outsold the Toyota division by 4,023 units, noted Caldwell of Edmunds.com, the first time Ford has bested the Toyota brand since April. And Ford as a company outsold Toyota as a company by 16,512 units, the first time that has happened since April as well.

CHRYSLER
Doubtless reflecting the effect of heavy incentives Edmunds.com’s True Cost of Incentives index says led the industry’s Big Six at $3,579 in February, several Chrysler LLC models recorded serious gains in February — but couldn’t reverse a trend that saw total Chrysler sales drop 14 percent for the month and 13 percent so far in 2008.

Chrysler executives said low consumer-confidence levels are hitting big-ticket purchases. But with a whistling-past-the-graveyard tone, they added hopefully that some pent-up demand may make itself evident in the coming months.

The Good
Everybody’s favorite whipping car, the Sebring, recorded a phenomenal 92 percent gain in February, to 11,056 units versus 5,744 the prior year. The usually maligned Chrysler Aspen enjoyed a hefty 31 percent gain in February and is up 25 percent for the year. And although the 1 percent gain for the new Town & Country was minimal, it was the industry’s only minivan to improve sales for the month.

The Jeep Patriot and Dodge Caliber platform-mates also benefited from new pricing schemes: Patriot leapt to 5,195 units, an astounding 707 percent increase — and not surprisingly its best sales month ever. Caliber appears to be gaining momentum, with a 10 percent hike for February, and with 10,937 sales, the second consecutive month in which Caliber sales hit five figures.

The Bad
There were too many minus signs in front of sales numbers for most Chrysler models: the Dodge brand was off 16 percent for February, highlighted by a 16 percent decline for the Ram pickup; the Chrysler brand dropped 10 percent thanks to an 85 percent slide for the soon-to-be-discontinued Pacifica (its worst month since its launch in 2003).

Every Jeep, save the aforementioned Patriot, suffered a February decline, the worst being the Commander at 53 percent and the Grand Cherokee at 34 percent. It looks like Jeep’s joyride may be over even for the once red-hot Wrangler, with sales down 27 percent for the year.

HONDA
Despite being one of the few automakers with overall sales on the positive side of the ledger for February, with a 5 percent rise, there could be trouble in paradise at American Honda Motor Co. Inc., and its name is Accord.

The all-new Accord, midway into its first year of sales, was down a significant 13 percent for February and has lost 10 percent to the previous car in year-to-date sales. Although those figures are posted amidst what many are conceding is becoming a full-blooded industry downturn, the numbers nonetheless will have planners at Honda wondering whether their best-selling midsize’s move to plumper dimensions or the new car’s nervous sheet metal are contributory factors.

The Good
The Fit subcompact could be the poster car for shifting consumer taste towards fuel-efficiency at an affordable price: February sales ratcheted up a hard-to-ignore 62 percent, and sales rose 88 percent for the year.

And Honda’s reputation for fuel-efficiency appears to be striking a chord, as the Honda division had its best February ever, selling 102,313 units.

An upturn in incentive activity — to an Edmunds.com TCI figure of $1,119 for February — pushed the Pilot large crossover to a 19 percent gain in a run-out year for what is an obviously aged design and will be replaced by a 2009 version.

Other solid gainers were the Civic lineup at plus 14 percent for February, and CR-V at 11 percent.

The Bad
There were plenty of Honda models in the negative column for February — and for the young new year. Element, Ridgeline, Odyssey — and oh, yes, Accord — all posted declines.

What’s more, not a single model from the company’s upscale Acura division can boast a year-to-date sales gain, and just one model — the MDX crossover, had a positive February, by just 0.8 percent. Most troubling and perhaps signaling a wider downward trend for luxury and near-luxury segments, Acura’s newest model, the RDX compact crossover, was off 19 percent for February and is down 18 percent year-to-year.

NISSAN
Despite incentive spending nearly double that of its prime Japanese competitors, Nissan North America was barely able to tread water against the undertow of a downward-trending U.S. vehicle market;  Nissan’s 86,219 sales in February amounted to just a 1 percent gain versus last year.

The Good
Nissan’s completely redesigned Murano cruised right into the successful path of the first-generation
model, selling 10,074 units in February for a handsome 19 percent gain. And like most subcompacts, the Versa was up in February, with a 7 percent gain, and is within sales-shouting distance of the larger and well-established Sentra compact.

The Infiniti premium division’s new G Coupe is starting off the year with a bang, improving 80 percent in February and 90 percent year-to-date. And Infiniti’s giant QX56 somehow eked out a 17 percent gain.

The Bad
Nissan’s trucks and SUVs fared poorly, reflecting the brand’s heavy mix of old-school, body-on-frame models that seem to be quickly falling from grace.

The rout was led by the Titan pickup’s monster 40 percent February decline and a 35 percent year-to-date drop. The Pathfinder saw a 28 percent slide in February, Xterra dropped 30 percent and Armada fell 31 percent. The Quest minivan dropped 54 percent to just 1,223 sales in February.

HYUNDAI
In perhaps the most remarkable aspect of the February fade, Hyundai Motor America posted an 11 percent drop in sales compared with a year earlier, when it set its sales records.

The Good
Hyundai has been boosting incentives across its model lineup, and sales of a few models picked up. Elantra sales rose slightly from a year earlier, to 6,750 vehicles from 6,128, for example.

The Bad
Despite zero-percent-APR incentives on Sonata, Hyundai wasn’t able to keep sales growing for the 2008 model as it clears away inventories for the 2009 Sonata it just began producing. Sonata sales dipped to 8,538 units from 12,137 units a year ago.

Similarly, sales of the Santa Fe SUV dipped, to about 6,000 units from 7,134 a year earlier.

BMW
The BMW Group in the U.S. reported a 2 percent decline in February from a year earlier.

The Good
Mini brand vehicles posted a 44 percent sales increase in the month and a 33 percent increase for the year to date. The gains were fueled by the February introduction of the new Clubman, Mini’s third variant in the U.S. market.

The Bad
BMW car sales fell 9 percent, to 15,869 vehicles, and were down by 18 percent for January and February combined. The company said such results “reflect[ed] BMW Group’s expectations for the month” and pointed to a string of coming new products, including the BMW 1 Series Coupe and Convertible, that “will push sales volumes again.”

Meanwhile, SUV sales fell by 1 percent for the month and 9 percent year-to-date.

MAZDA
Mazda bucked the February trend largely because its vehicles mostly occupy the two clear, remaining sweet spots in the U.S. market: crossovers and small cars. Booming crossover sales led the way.

The brand posted a 7 percent sales increase for February and marked an 8 percent gain for the year.

The Good
Winner of a handful of industry awards for its segment, the CX-9 reported an 88 percent sales increase. Meanwhile, stablemate CX-7 posted an 8 percent gain. Overall, Mazda’s crossover lineup recorded a 50 percent sales increase for the month and a 60 percent improvement for the year-to-date.

Mazda6 was about even for February and posted a 135 percent increase for the year-to-date.

The Bad
Sales of Mazda’s sportiest cars have hit the skids so far this year, perhaps a companion indicator to the luxury-vehicle sales woes of rival brands. The MX-5 Miata sold 17 percent fewer units than a year ago, and 24 percent fewer for January and February combined. Meanwhile, RX-8 sold 35 percent fewer for February and 42 percent fewer for the year-to-date.

VOLKSWAGEN
Volkswagen reported mixed results, with a gain for its Volkswagen brand and a decline for the Audi luxury brand.

Volkswagen eked out a 1 percent sales increase for February, to 16,556 vehicles. The hardtop convertible Eos led VW’s results, posting a 33 percent sales increase over February 2007. Rabbit and Jetta sales gained as well.

For Audi, February brought a 7 percent sales hit.

KIA
Kia Motors America posted a slight decline in February sales, to 21,988 vehicles from 23,512 a year earlier. Sales of its smallest vehicles, including Rio and Spectra, inched up.

MERCEDES-BENZ
Mercedes-Benz bucked all industry trends by reporting record sales volume for any February, with an increase of 7 percent, to 18,564 new vehicles. Year-to-date, sales were up 7 percent as well.

Sales of its SUV models led the way with a 12 percent increase, including M-Class models (up by 27 percent) and R-Class sales (up by 6 percent).

Mercedes-Benz car sales increased 5 percent for the month, including a 3 percent increase for the SL roadster and a gain of 7 percent for the high-end CL coupe.

SUBARU
Subaru of America sales were flat at about 12,900 vehicles in February.

Its most popular model, Legacy, led Subaru’s decline, with sales off 9 percent. Impreza and Tribeca sold at higher rates.

MITSUBISHI
Mitsubishi Motors, which has been steadily climbing out of its self-dug hole in the U.S. market, hit the headwinds of the economic downturn in February, recording a 6 percent sales drop many larger automakers nonetheless would be proud to claim. Mitsubishi sold 9,105 vehicles for the month.

The Galant midsize sedan enjoyed a healthy 16 percent gain in February and is up 22 percent for the first two months of 2008. And the Eclipse sport coupe had its best February since 2002, tallying 2,079 units for a 7 percent gain.

But Mitsubishi’s February hero was the Lancer compact, which jumped 48 percent and is up 14 percent year over year.

SUZUKI
American Suzuki Motor Corp. appears to be reaping the benefit of not having a lot of heavyweight hardware to sell: Suzuki joined a select few automakers to record a February sales increase, improving sales by 3 percent over last year.

Suzuki’s light-leaning product lineup with several recently redesigned models connected with the market in February, recording increases for the SX4/Aerio (93 percent) and XL-7 (57 percent).

The old-school Grand Vitara slid by 14 percent, however, and is down 28 percent for the year, and the aging Forenza/Reno compacts also dropped by 61 percent.

PORSCHE
For Porsche Cars North America Inc., February was not kind: Porsche was pounded with a 13 percent sales decrease compared with February 2007. In all, Porsche sold 1,715 vehicles in February.

Although the year is young, Porsche is on a pace to fall short of 25,860 sales this year, which would represent a freefall of around 25 percent from Porsche’s 2007 total of 34,693 sales.

February’s lone bright spot, curiously, was the Cayenne crossover lineup, which at 755 February sales more than doubled last February’s total of 360 units. Cayenne nonetheless still trails 2007’s first two month’s sales by one.

The Boxster/Cayman line faded by 31 percent in February and the evergreen 911 lineup dropped by 55 percent, recording a total of just 602 sales compared with 1,086 in February 2007.

Photos:
1—2008 Ford Taurus
2—2008 Chevrolet Malibu
3—2008 GMC Acadia
4—2008 Saturn Astra
5—2008 Ford Ranger
6—2008 Land Rover LR3
7—2008 Toyota Prius
8—2008 Chrysler Sebring
9—2008 Honda Accord
10—2008 Honda Fit
11—2008 Acura RDX
12—2009 Nissan Murano
13—2008 Mini Clubman
14—2008 Mazda CX-9
15—2008 Volkswagen Eos
16—2008 Mitsubishi Galant
17—2008 Porsche Cayenne

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