GM, Ford, Toyota Sales Fall as Gas Prices Discourage Buyers

General Motors Co. (GM), Ford Motor Co. (F) and Toyota Motor Corp. (7203) reported U.S. sales in May fell, missing analysts’ estimates, as higher gasoline prices and smaller discount offers deterred purchases.

GM deliveries dropped 1.2 percent to 221,192 vehicles, the Detroit-based automaker said today in a statement. The average estimate of three analysts was for a 1.5 percent increase. Ford light-vehicle deliveries fell 2.6 percent to 191,529, compared with five analysts’ average estimate for a 0.5 percent decline. Toyota’s U.S. sales plunged more than analysts’ estimated.

Gasoline that has topped $3.50 a gallon since March and automakers’ “dramatic” cuts to incentives led some buyers to defer purchases, said Don Johnson, vice president of U.S. sales at GM. Industrywide light-vehicle sales ran at an 11.8 million seasonally adjusted annual rate, trailing the 12.1 million pace that was the average of 11 analysts surveyed by Bloomberg.

“Gas prices did have an impact not only on what consumers were buying but also their willingness to buy,” said Jeff Schuster, J.D. Power & Associates’ executive director of global forecasting. “Until we see a more progressive decline or we at least settle at a more stable level below $4 a gallon, we’ll still have buyers hesitating and waiting out purchases.”

GM fell $1.58, or 5 percent, to $30.23 at 4 p.m. in New York Stock Exchange composite trading. Ford declined 69 cents, or 4.6 percent, to $14.23. Toyota City, Japan-based Toyota’s American depositary receipts, each representing two ordinary shares, dropped $1.79, or 2.1 percent, to $81.50.

Toyota, Honda

Toyota and Honda Motor Co. (7267) led declines among major automakers as Japan-based manufacturers worked to recover from the earthquake and tsunami that idled factories and created a shortage of parts and vehicles. The disaster may result in 3 million to 3.5 million units of global production that will be lost or deferred until next year, according to IHS Automotive.

Toyota, which built 45 percent of its cars in Japan last year, reported a 33 percent drop in May deliveries, exceeding the 27 percent decline that was the average of three estimates. Tokyo-based Honda, the second-largest Japanese automaker by U.S. sales, said sales fell 23 percent, less than the 25 percent average of three estimates.

U.S. sales for Nissan Motor Co. (7201) dropped 9.1 percent last month, according to an e-mailed statement. The Yokohama, Japan-based company was expected to report a 7.3 percent decline, the average of three estimates compiled by Bloomberg.

Chrysler, Hyundai Sales

Chrysler Group LLC sales rose 10 percent to 115,393 vehicles. That topped the 9.5 percent increase estimated on average by five analysts. The Auburn Hills, Michigan-based company repaid $7.6 billion in U.S. and Canadian government loans during the month.

Hyundai Motor Co. (005380), South Korea’s largest automaker, reported a 21 percent sales increase, and affiliate Kia Motors Corp. (000270)’s deliveries climbed 53 percent. The companies, which operate separately, sold a combined 107,426 vehicles last month, more than either Honda or Nissan.

The 11.8 million annualized sales pace for the industry in May followed three straight months of a rate faster than 13 million and 12.6 million in January, according to researcher Autodata Corp.

Confidence (CONCCONF) among U.S. consumers in May unexpectedly dropped to a six-month low as incomes were squeezed by gasoline that averaged $3.90 a gallon during the month. The percentage of consumers planning to buy a new vehicle within six months fell in May to 3.3 percent, the lowest since January, the New York-based Conference Board said yesterday.

‘Flat Spot’

“The economic recovery is in a bit of a flat spot right now,” Paul Ballew, chief economist for Nationwide Mutual Insurance Co. in Columbus, Ohio, said in a telephone interview. “When you back off on incentives, increase prices and have some shortages among the Japanese automakers, you get a lackluster month.”

The average price of regular unleaded gasoline was $3.78 a gallon yesterday, according to AAA, the nation’s biggest motoring organization. The price reached $3.99 on May 4, the highest since July 2008.

GM, the largest U.S. automaker, repeated its forecast for U.S. industry deliveries of 13 million to 13.5 million this year, including medium- and heavy-duty trucks, as the automaker expects sales to recover late in the year. The annualized sales rate may remain below 13 million until at least August, Johnson said today on a conference call.

‘Temporary’ Weakness

“We expect this temporary period of weakness to be followed by a pretty good economy in the second half,” Ellen Hughes-Cromwick, Ford’s chief economist, said today in a conference call.

GM’s declining sales in the U.S follows a decrease in April deliveries in China. Weaker sales in its two biggest markets have weighed on the automaker’s shares, which need to rise to $53 for the U.S. Treasury Department to break even on its $50 billion bailout of the automaker.

The federal bailouts of the auto industry that included assistance to GM and Chrysler may result in losses of less than 20 percent of the $80 billion provided by the U.S. Treasury Department, Ron Bloom, White House adviser for manufacturing policy, said today at a briefing.

Treasury Stake

The U.S. wants to divest its ownership share of about 33 percent of GM and 6 percent of Chrysler “as soon as practical” and the Obama administration doesn’t have a “target price” to sell its remaining stakes, Bloom said in Washington.

“We gave a clear signal we’re not going to be long-term investors” in the auto industry, he said.

GM ended May with U.S. inventory of about 584,000 vehicles, up from about 577,000 units at the end of April. There were about 110 days of supply of large trucks at the end of May, and inventory of the Chevrolet Cruze compact car was about 37 days.

Ford ended the month with 397,000 vehicles in U.S. inventory, a day supply in the “low-50s,” sales analyst George Pipas said on a conference call. The average transaction price for its models climbed about 4 percent in May, he said.

Ford, which said last week it raised prices by about 0.4 percent per vehicle in May, may have also reduced incentive spending by 2.5 percent in the month to $2,283 per vehicle, according to auto-pricing website Edmunds.com.

Incentives for the industry may have declined 0.7 percent, led by a 46 percent drop for Honda and 27 percent decrease at Toyota, according to Edmunds.

‘Pricing-Driven’ Declines

The industry’s lower sales in May represent “a pricing-driven decline, not an economic indicator,” said Jeremy Anwyl, chief executive officer of Santa Monica, California-based Edmunds. “Sales will jump when prices drop.”

Average new-vehicle selling prices rose $608, or 2.1 percent from a year earlier, to $29,817 in May, according to TrueCar.com, an auto-pricing website also based in Santa Monica, California.

Light-vehicle sales climbed to 11.6 million in 2010 from a 27-year low in 2009. Deliveries still were 31 percent fewer than the 16.8 million annual average from 2000 to 2007, according to Autodata. The 11.8 million rate this month is 1.7 percent higher than the 11.6 million pace in May 2010.

To contact the reporters on this story: Craig Trudell in Southfield, Michigan, at ctrudell1@bloomberg.net; David Welch in Southfield, Michigan, at dwelch12@bloomberg.net.

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net.

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