Vehicle sales slumped again in the crucial U.S. market last month and although the decline was less than the dismal 12-per-cent slide in July, General Motors Corp. will cut production, while Ford Motor Co. will boost output and has introduced new rebates to spur sputtering sales.
"We have an industry that's clearly in the midst of some kind of mild contraction, I don't know how else to describe it," Paul Ballew, GM's executive director of global markets, said on a conference call yesterday.
But the market is much more buoyant in Canada, where auto makers reported the best August on record with a 3-per-cent rise in sales to 158,624 from 153,905 a year earlier.
GM was cheered by an unexpected jump of 5 per cent in U.S. sales last month from year-earlier levels, but the largest Detroit auto maker said its North American factories will turn out 10 per cent fewer vehicles in the fourth quarter than they did in the same period in 2006, with about half the cut caused by the housing crisis and rising gasoline prices.
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U.S. sales fell by more than 3 per cent - the third straight monthly decline. Ford, Chrysler LLC and Toyota Motor Corp. all reported that sales fell from year-earlier levels. The 16-per-cent drop in Ford's sales prompted the company to slap new incentives of $1,000 (U.S.) on its 2007 and 2008 models, although it's also increasing production from the levels reached in the fourth quarter of 2006.
Honda Motor Co. Ltd. joined GM in bucking the downward sales trend. Toyota outsold Ford in the U.S. market for the second straight month.
"Right now the biggest impact on the vehicle industry is coming about due to the fact that we've had gas prices run up to roughly $3 a gallon, we have a pretty severe housing correction occurring in parts of the country, and then we have a segment of the U.S. population which is being impacted by those factors and they are delaying their vehicle purchases and exiting the new vehicle market," Mr. Ballew said.
That queasiness among U.S. consumers spills across the border and affects the Ontario auto belt, as workers in Oshawa, Ont., found out last week when GM announced it will eliminate the third shift of production at its pickup truck plant in that city.
GM said yesterday that sales of its big pickups rebounded dramatically in August from a plunge in July in the U.S. market, but noted that it boosted incentives on the Chevrolet Silverado and GMC Sierra by more than $400 to $3,900 a vehicle.
The increase in pickup sales is good news in an otherwise gloomy outlook, Canadian Auto Workers economist Jim Stanford said.
"Who knows, maybe we'll be able to convince GM to put the third shift back on sooner rather than later, if their pickup sales continue to regain momentum," Mr. Stanford said. Gains by the Canadian units of the Detroit Three helped boost sales in Canada, which now are on track to top 1.65 million units.
Ford Motor Co. of Canada Ltd. put in one of its strongest performances of the year with a 9-per-cent jump that moved it closer to Chrysler Canada Inc. in the battle for second place behind General Motors of Canada Ltd.
GM sales rose 3 per cent, while Chrysler posted a 1-per-cent rise.
August was the best month yet for Honda Canada Inc., which posted a jump of 3 per cent to 18,270. That boost allowed it to surpass Toyota Canada Inc., whose sales slid 5 per cent to 17,947.
"We can owe most of this hot market to the West, whose sales are up double digit across the Prairies and into B.C.," said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants.
"As well, the strength of the dollar relative to the U.S. dollar has given [auto makers] a lot of room to provide better pricing into the market," Mr. DesRosiers said. Most of the benefit to consumers has come in the form of increased incentives, he said and not through lower manufacturers' suggested retail prices.
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August U.S. auto sales
General Motors: UP 5 per cent
Honda: UP 5 per cent
Ford: DOWN 16 per cent
Chrysler: DOWN 6 per cent
Toyota: DOWN 3 per cent
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