July Car Sales: Worst Since the Early 1990s Recession
August 01, 2008

 

By Michelle Krebs and Bill Visnic

DETROIT -- One would have to dig into the history books back to 1992 to find a worse month for car and truck sales in the U.S. than July.

The Seasonally Adjusted Annual Rate (SAAR) fell under 13 million vehicles -- 12.55 million to be exact -- the lowest rate since the recession of the early 1990's. Of the Big Six automakers, only Nissan reported an increase in sales. Even Honda, which analysts had predicted would see an uptick, reported lower July sales. Detroit's Three slumped to their lowest combined market share -- 43.4 percent -- in history.

"This period of time feels a lot like 1991 and 1992," Mike DiGiovanni, General Motors executive director of global market analysis, said in a conference call on sales with media and analysts Friday. "The issues were similar with that recession -- high oil prices, fear of oil availability and some housing issues."

Economic indicators released during the week piled on to those, including economic growth numbers that were revised downward for the first half and a jobless rate that climbed to its highest level in more than four years.

And on top of dismal car sales, automakers' posted ugly financial results. GM announced a whopping $15.5-billion loss for the second quarter, its third-worst loss in history. BMW said its profits were down by a third, for its worst showing in seven years. Nissan posted profits that nosedived 43 percent. Toyota is expected to show lower profits as well when it announces financial results next week.

"In my 38 years in the business, these are the most challenging times I've seen," said Chrysler President Jim Press in a conference call with media Friday. "The fact of the matter is we're getting a dose of reality. We've had five to 10 years of a housing bubble, low interest rates, low fuel costs, economic growth and credit availability that may not have been the real level. This may be more normal."

Here's a company-by-company rundown:

General Motors: Not Enough Car To Offset Truck Demise

GM sold 235,184 vehicles in July, down 26.7 percent from a year ago on an unadjusted basis (down 31.8 percent adjusted for the difference in selling days between this year and last). GM blamed weak overall vehicle sales, the poor U.S. economy, high fuel prices and a shortage of popular small cars for the decline.
 
The Good

GM's car business was healthy. At Chevrolet, Aveo sales were up nearly 17 percent for its one of its best months ever, the Cobalt, which outsold the Ford Focus in June, had sales up 3.5 percent in July (15.4 percent for the year so far) and Malibu sales soared 79 percent for the month. 

In a conference call with reporters, Mark LaNeve, GM's head of North American sales and marketing, said Cobalt and Malibu, both in extremely short supply, should do even better this fall when the Lordstown, Ohio, plant that makes the Cobalt adds a third shift and Malibu production is boosted at the Orion Township, Mich., plant.

At Pontiac, sales of the G5, G6 and redesigned Vibe were up in July.

At Saturn, the Aura, which now offers a four-cylinder as well as a V6, had its best month ever by 400 units for an increase of 23.6 percent in July. The Sky bucked the downward trend of the convertible market and posted sales that were up 14.3 percent in July. The newly introduced Astra appears to be gaining momentum, with a 75 percent increase over June.

The Buick Enclave, the first of the crossover quadruplets to hit the market, remains the strongest with sales up 28 percent in July. Its siblings, the GMC Acadia and Saturn Outlook, reported lower sales. The Chevrolet Traverse hits the market soon.

The Bad

In total, GM sales were down 26.7 percent in July, pushing sales so far this year 18 percent lower.

Sales of GM trucks of every size along with large and midsize SUVs were abysmal. Truck sales were down 29 percent in total. Sales of midsize SUVs, including the Chevrolet TrailBlazer, plummeted a whopping 75 percent. Large SUVs were down another 40 percent.

The declines were across the board with every division posting a double-digit decrease in sales from a year ago, setting records for new lows:

* Buick -- down 39.9 percent in July, off 24 percent for the year for Buick's worst month at least since January 2002.

* Cadillac -- down 24.2 percent in July, off nearly 12 percent for the year. Cadillac's second-worst month at least since January 2002.

* Chevrolet -- down 24.7 percent in July, off nearly 17 percent for the year. July marked Chevrolet's worst month in at least a decade. August 1998 was the last month Chevy had a lower volume.

* GMC -- down 37.7 percent in July, 21 percent for the year.

* Hummer -- plunged 61.7 percent in July, down 44 percent for the year. GM is considering the sale of the Hummer brand.

* Pontiac -- down 15.5 percent in July; down 13.3 percent for the year.

* Saab -- down 37.6 percent in July, 30.4 percent for the year.

* Saturn -- down 13.6 percent in July, 18 percent for the year.

Ford Toughs Out a Tough July

Ford Motor Co. saw July sales dip an overall 14.9 percent -- but compared with the outsized losses from rivals GM, Chrysler LLC, and even Toyota Motor Corp., Ford's loss looks like a victory.

A giant 54.4 percent July downturn in SUV sales and an overall drop of 22.1 percent for sales of all Ford trucks was offset by a 5.9 percent gain on the passenger-car side of the business, including a hefty 13.5 percent jump for the Fusion midsizer and a 15.6 gain for the Focus compact (despite the fact July was Focus' worst sales month since January).

Jim Farley, group vice president for marketing and communications, said Focus likely would have performed better, but like many compact and subcompacts in the industry, suddenly-tight supplies are curtailing sales.

Sales chief George Pipas chimed in to say that small cars leaped up to account for 27 percent of retail sales in July, a 6 percent hike over this time last year. He said limited availability has put "a temporary and artificial cap on small-car sales."

The Focus has increased its portion of retail market share by two points, Pipas added, and average transaction prices are up by $750 -- a considerable feat in a market rife with incentives.

Ford also said it is gradually but definitively drawing down inventories of the F-Series pickup, a vital strategy before the all-new '09 models go on sale later this year -- a launch that has been delayed specifically, the company claims, for the purpose of cleaning out the inventory of the current F-Series, which was down 20.6 percent for July and 22.4 percent for the year, despite giant-size incentives.

The Good

Apart from the Focus and Fusion, there were some positive surprises on the car side.

• The Mustang, for one, held its own in a flagging market, posting a 0.3 percent increase and at least temporarily halting a trend that has resulted in a year-to-date sales drop of 25.3 percent.

• In another signal that July must have been a decent month for drop tops (VW did well with its Eos and GM's Saturn Sky sold well), Ford-owned Volvo Cars rang up a 27.4 percent increase for the C70 (July total units: 540), which also is up 41.9 percent for the year.

The Bad

• Every Ford unit was down in July and year-to-date: Ford brand by 14 percent (14.3 percent YTD); Lincoln by 1.2 percent (20.1 percent); Mercury by 13 percent (22.7 percent) and Volvo by 46.3 percent (19.3 percent).

• Every Ford light truck and SUV shed sales, led by Explorer and Expedition, both of which were saddled with enormous 50 percent-plus losses -- Expedition at 57.5 percent and Explorer at 51.8 percent. The two mainstream SUV models are down for the year by 38.9 percent and 35.6 percent, respectively.

• Every Volvo model except the XC90 sold less than 750 units.

Ford officials expect the second half of the year to be worse than the first half, with total industry sales running at about a 13-million-unit pace; they expect the year to end in the 14-million to 14.5-million range.

And the 800-pound gorilla in the market now seems to be the blow-up of the leasing business. Pipas said leases currently account for about 18 percent of all Ford sales transactions, but boding poorly for sales in an already lousy year, Farley said, "Leasing will become a smaller part of our business," and that Ford will "refocus on retail."

Farley said leasing transactions will drop as an overall credit crunch grips the industry, making it more difficult for buyers to secure any kind of credit, purchase or otherwise.

"The unfolding credit situation customers are facing in dealerships will take center stage," for the immediate future, said Farley.

Chrysler: Below 100,000 Sales

Chrysler sold 98,109 units, down 34.2 percent from last July on an adjusted basis (29 percent unadjusted).

But ever the spin doctors, Chrysler execs in a conference call with the media said sales comparison between months of 2008 and months of 2007, before private equity firm Cerberus Capital Management took control of the automaker are unfair. With new ownership, Chrysler President Jim Press insists, the company has adopted a completely new strategy of reducing fleet sales -- which GM and Ford already have bits to squelch rumors of its impending demise -- that it earned $1.1 billion in the first six months of the year and has $11 billion in cash reserves.

The Good

Indeed, Chrysler July sales report, unlike past months like June, had some good news. Notably every division had at least on vehicle that posted a year-over-year sales increase, something that hasn't happened in previous months.

Chrysler's Town & Country recorded a 24 percent sales increase in July, though its sales remain down 7 percent for the year to date.

Jeep Patriot sales edged 4 percent higher.

Dodge Avenger sales eked out a 2 percent sales increase for July. The Viper also had higher sales.

The Bad

Chrysler's total sales fell below 100,000 units for the month, the lowest Edmunds.com has on record by nearly 19,000 units.

Chrysler division sales were down 40 percent in July and are off 30 percent for the year. Jeep division sales plummeted 39 percent in July and are down 21 percent for the year. Dodge sales dropped 17 percent in July and are off 20 percent for the year.

The once popular Dodge Durango sold a why-bother 384 units in July. For perspective, Chrysler sold more than 12,000 Durango models in July four years ago.
 
Toyota: Rocked but Not Rolling in July

Toyota Motor Corp. proves there's no magic shield from the ugliness that is the U.S. auto market, with sales dropping 18.7 percent in July (adjusted), more than Ford Motor Co. and markedly worse than its major Japan-based rivals Nissan Motor Co. Ltd. and Honda Motor Co. Ltd.

Year-to-date sales for the company have decreased by 8.1 percent.

The glaring issue for Toyota -- apart from its inconvenient exposure, as a full-line automaker, to the continuing consumer pullback from pickups and SUVs -- is one of aligning production with consumer demand. Case in point: there's nothing more in demand than Toyota's 45-mpg hybrid-electric Prius, yet Prius sales were down 15 percent in July -- and, incredibly, now are down 4.5 percent for the year.

This is not an issue exclusive to Toyota, as almost all major automakers find themselves in the situation of being able to sell more of what customers want -- if only the makers were actually geared up to produce those models.

"Having the industry's most fuel-efficient lineup is of value to us so long as we have the right product mix in our showrooms," confirmed Toyota Motor sales president Jim Lentz in a release. "That's why we're accelerating production of four-cylinder models and quickly responding to market conditions with repurposed U.S. plants and plans for a U.S.-built Prius."

The Good

Not that much, really. Toyota's all-new Corolla, which launched to it's-a-dog reviews, appears to be nonetheless catching on with economy-conscious customers: July sales were up 7 percent (though still down slightly year-to-date).

Much the same applies to the Yaris subcompact -- although down slightly for July, sales are up a plump 33.4 percent for the year.

Almost inexplicably, the Sequoia full-size SUV and Land Cruiser, as well as the Lexus LX 470, enjoyed sales increases. Land Cruiser volumes are extremely low, so not much is required to significantly move the needle (285 units this July vs. 163 last year), but Sequoia increased a hefty 50.4 percent increase and the Lexus LX rang in with an outsized 277.7 jump on 843 units sold.

In a situation that likely has GM's Hummer division seeing red, Land Cruiser sales are up a hard-to-ignore 95.8 percent for the year, with 2,772 total units, and Sequoia also is up a solid 32.1 percent. 

The Bad

Except for the Yaris on the car side and the Land Cruiser and Sequoia in the truck showroom, no Toyota car or truck posted a July sales increase.

The Tundra full-size pickup plunged 46.5 percent in July and is down 15.6 percent for the year as Toyota scrambles to reallocate U.S. Tundra capacity. Tundra is on pace to sell just 71,000 units this year; Toyota's original goal was 200,000 a year.

Every Lexus model, save the aforementioned LX, experienced a double-digit drop in sales. And the Lexus division increasingly is an overall albatross around the Toyota neck; in July, total Lexus sales amounted to just 22,182 units, an eye-opening 24.6-percent decrease from last year. Year-to-date Lexus division sales are off 15.7 percent.

Noteworthy among the Lexus results: the RX crossover -- the longtime benchmark for the midsize premium crossover segment -- was down 22.1 percent for July and is down 14.4 percent for the year; sales were 7,101 units for the month. The best-selling ES was down a noticeable 25.7 percent for July and is off 18.6 percent for the year, while the flagship LS was down a thundering 49.8 percent for the month and 36.1 percent for the year, tracking to sell less than 25,000 units in total this year.

Honda: Dragged Down by Trucks

American Honda, sold 138,744 vehicles in July, a decline of 9.2 percent on an adjusted basis. Honda car sales rose 6.7 percent last month -- a new July record -- but truck sales took a 27.8 percent beating, dragging the company's overall July sales down.

"The uncertainties in the market have been quite profound in the past few weeks," said Dick Colliver, executive vice president of sales for American Honda, in a statement. "We are adjusting our production to meet the rapidly changing needs of buyers and are confident these changes will provide the needed inventory as we move forward."

Honda recently announced it would produce more Civics for the 2009 year, including at its new Indiana plant. It will scale back production of the Pilot and Odyssey.

The Good

Forgetting about trucks, the high points for Honda, as one would expect, included the Fit subcompact, racking up a new record of 12,266 in July -- a giant 78.5 percent jump -- and Civic Hybrid, with sales up 27.4 percent to 3,440 for the month. Sales of the standard Civic were down 3.5 percent for July, but remain up a plump 15.4 percent versus last year.

The large-midsize Accord also recorded a sales increase of 2.8 percent, selling a substantial 41, 382 units.

The Bad

Pilot, Odyssey, Element and Ridgeline -- and even the best-selling CR-V -- all helped cripple Honda's overall month with double-digit declines, though. Despite being heavily revised and with all-new sheet metal, Pilot slid 47.4 percent for July and is down 21.5 percent for the year. For July, the Odyssey minivan was off 14.3 percent, Element dropped 28.7 percent and Ridgeline was walloped with a 47.4 percent plunge, although it is off a less-disastrous 17.7 percent for the year.

Strangely, CR-V, the segment's best-seller, was down 19.9 percent in July, although year-to-date numbers are off by just 2.2 percent. Limited inventories may have caught up with Honda's compact crossover.

Honda's Acura premium division also continued to struggle: total sales in July were down 17.7 percent, despite the recent addition of the all-new TSX entry-level car, which jumped 15.9 percent in July and remains up by 4.2 percent for the year. The relatively new MDX midsize crossover dropped a precipitous 35.1 percent and the RDX compact crossover fell 7.6 percent in July and is off by a worrisome 22.1 percent so far this year.

Nissan: Only One of Big 6 Up

Nissan North America sold 95,319 Nissan and Infiniti-branded vehicles in July, an increase of 8.5 percent from July 2007 on an unadjusted basis (0.1 percent adjusted).

Nissan sales climbed 9.9 percent to 86,070 vehicles sold. Sales of the Versa subcompact continued to be strong with 8,701 sold, up 14.4 percent from a year ago. Similarly, the Sentra posted a 16-percent increase with sales of 10,997 units.

The Good

Nissan bucked the industry trend of lower sales with its July performance.

Nissan's small cars continue to sell well. The Versa subcompact saw sales rise 14.4 percent in the month to help it outsell rival Toyota Yaris. Versa sales are up nearly 20 percent for the year. Sentra sales rose 16 percent in July; they are up 5.3 percent for the year. Altima sales were flat in July but are up nearly 11 percent for the year.

The newly introduced Maxima had a 6.9 percent sales increase. July marked the Maxima's best month since September 2007.

Sales of the Infiniti G Coupe soared 45 percent in July and are ahead a stunning 73 percent for the year.

Helped by extremely generous incentives, Nissan trucks -- which also includes SUVs and minivans -- saw sales increases unlike any in the industry. Frontier sales rose 24.3 percent, Xterra sales were up 17.5 percent, Quest sales rose 15.5 percent and the newly redesigned Infiniti FX had a sales climb of 19.2 percent.

The Bad

July's sales increase wasn't enough to push Nissan in total into positive territory for the calendar year. Its sales remain down about 1 percent.

Likewise, though truck sales rose in July, they remain down for the year by nearly 10 percent.

Infiniti sales were down about 3 percent in July, about the same amount for the calendar year to date. Its cars led the decline with Infiniti car sales off 14 percent in July and down 6 percent for the year.

The Nissan 350Z suffered its worst sales month since its launch with only 795 sold.

THE EUROPEANS

Audi

Audi, just now introducing its new A4, sold 6,804 vehicles, a decline of 4.5 percent.

On the plus side, A3 sales jumped by 30.5%, and the A6 and A8 grew 14 percent and 2 percent, respectively.

To date, Audi has sold 51,827 vehicles in 2008, a 1.9 percent decrease over the previous year.

BMW

BMW Group U.S. said July sales bucked the overall industry downward trend, rising 2.2 percent. But BMW sales were buoyed upward by continuing success at its Mini brand.

Overall BMW-brand sales were down 1.6 percent in July. Sales at the Mini unit increased by 24.4 percent, however, on a volume of 5,063 units.

BMW said sales of its Sports Activity Vehicles were down 10.7 percent.

Daimler: Mercedes-Benz, Smart

Mercedes-Benz is on track for a record year. The German brand sold 20,733 vehicles in July for an 11.6-percent increase over last July. This brings the year-to-date total to 140,012 units, marking a 2.3 percent increase over the same period last year, a new record.

Mercedes' strength is coming from the new C-Class and the E-Class, which posted gains of 45.4 percent and 53 percent, respectively.

Daimler's Smart brand, which just launched in January, sold 2,559 vehicles in July, bringing the total so far this year to 13,958.

Porsche

Porsche Cars North America Inc. weathered a difficult U.S. sales environment by posting a comparatively healthy 3 percent drop in sales versus a record July 2007.

The Boxster S and several variants of the 911 all scored sales gains, with the Boxster/Cayman and 911 lineups both slightly improving over last July's sales. Year-to-date sales for the 911 model range are down a worrying 29 percent, however, and Boxster/Cayman sales trail last year by 15 percent.

July sales for the Cayenne crossover, meanwhile, slipped by 17 percent, although they remain positive for the year.

Volkswagen

Volkswagen was one of the few automakers to keep its head above water in July: sales were up 4 percent compared with June and remained 1.1 percent ahead of last year's pace.

The bad news buried in the comparative good is the weak performance of VW's Rabbit compact at a time when other automakers' fuel-savers are being scooped up by a fuel-price-weary public. Sales of the Rabbit were off 19.2 percent in July and continue down 5.8 percent for the year. The performance-oriented GTI variant of the Rabbit, however, ran off to a 31.4 percent jump in July, although it also remains down for the year.

Also alarming is the dropoff for the Passat lineup. Although the wagon variant of VW's midsizer was up 3.7 percent in July (total monthly sales: 476), sales of the Passat sedan plunged 45.6 percent. The Passat lineup is keeping close to last year's pace, however, being down just 2.5 percent compared with last year.

Volkswagen's Jetta lineup -- which just added a wagon body style -- was the month's bright spot, up 14.7 percent, although the line is down 4.1 percent for the year. And the Eos hardtop convertible posted a 14.6 percent gain in July, selling 1,363 units.

THE ASIANS

Mitsubishi

Mitsubishi sold 9,644 vehicles in July, down 6.8 percent from last July but up 28.7 percent from June.

Galant had its best July in three years with sales rising 30.6 percent from a year ago. Eclipse coupe sales rose 35.6 percent. Endeavor sales rose 22.6 percent. Lancer Evolution sales soared 141.2 percent, though on small volume.

Subaru

Subaru of America sold 16,271 vehicles in July, a 5 percent increase over the same month in 2007.

Subaru's sales hike came on the strength of the Impreza, which had its best July in history with a 19 percent sales increase, and the Forester, which had a 51 percent increase over July 2007 and its third straight month of strong sales. Those two models offset sales declines of Subaru's other models -- the Legacy, Outback and Tribeca. Tribeca sales nosedived 53 percent.

"Subaru is positioned well for the current automotive climate," said Tim Colbeck, vice president of sales for Subaru of America, in a statement. "Our products give a great combination of economy and capability that has allowed us to grow our market share every month this year, and we now have our highest market share ever."

So far this year, Subaru has sold 110,366 vehicles, a 5 percent gain over the same 2007 period.

Suzuki

American Suzuki Motor Corp. sold 8,103 vehicles in July, an increase of 2 percent over last year's July sales total.

Suzuki's sales increase came largely from strong SX4 sales. Suzuki sold 2,595 SX4 models, a 160 percent increase over 2007 and representing more than a quarter of all Suzuki sales. Sales of the XL7 also increased. The Grand Vitara pitched in with 1,256 sales, though that was down from a year before. The Grand Vitara gets a mild makeover for the next model year, with two new engines available, including a four-cylinder.

"With potential car buyers' current focus on fuel-efficient, affordable vehicles, Suzuki is poised for continued growth through the end of the summer and into the 2009 model year," Mark Harano, executive vice president of American Suzuki Automotive Operations, said in a statement.

Kia

For the fourth consecutive month, Kia posted record monthly sales. In July, Kia sold 28,021 vehicles, an increase of 5 percent over July 2007. So far this year, Kia's sales are running 2.5 percent ahead of 2007.

The Sportage had its best month of the year with 4,035 sold, a 6.2 percent increase. The Spectra had strong sales of 5,910 units. Rio and Optima both had increases of 22.1 percent and 49.1 percent, respectively, over the same period last year with 3,707 and 6,258 units sold.
 
Hyundai

Hyundai sold 40,703 vehicles in July for a 6.5 percent decline. Accent and Elantra had extremely strong sales, with increases of 96 percent and 31 percent, respectively.

Dave Zuchowski, Hyundai Motor America's vice president of national sales, said the Korean automaker expects better sales ahead with the opening of its four-cylinder engine plant in Montgomery, Alabama. That will allow us to shift our engine mix for future product," he said. Consumers are demanding more four-cylinders than V6 with gas at $4 a gallon.

Graphic by Robert Holland

Figures in the graphic are based on sales percentages adjusted for the difference in selling days between July 2008 and July 2007.

Analysis for this report provided by Jessica Caldwell, Edmunds.com's manager of pricing and industry analysis.

 

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