October Auto Sales Fall 3%

Results are mixed as Chrysler and Ford slip badly, GM hangs on, and Toyota edges up

Sales fell 12% for Chrysler in October while overall U.S. auto sales fell only about 3% for the month, underscoring Chrysler's announcement the same day that it will cut another 9,000 jobs on top of 13,000 jobs cuts already planned, and kill four models.

"We know we've got some work to do," said Darryl Jackson, Chrysler's vice-president for U.S. sales, in a Nov. 1 conference call reviewing October sales.

For the industry, U.S. light-vehicle sales were 1,231,575 in October, according to AutoData in Woodcliff Lake, N.J. That was about 3% behind the same period last year, adjusting for the fact that there were 26 selling days in the month just ended, compared with 25 days in October, 2006. Monthly comparisons in this story are adjusted for the number of selling days.

Without adjusting for sales days, U.S. sales were up about 1.2% compared with October, 2006. Year-to-date, U.S. industry sales were down about 2.5%, vs. this time period a year ago.

Jeep in the Dirt

The Jeep brand sales fell about 24%, to 31,856 vehicles, in October. That includes some planned cuts in unprofitable fleet sales, Jackson said. But it also highlights that fact that a number of Chrysler's new 2007 models, such as the poorly received Jeep Compass (BusinessWeek.com, 10/25/06), failed to catch on with buyers.

Cerberus Capital Management, a New York-based private equity firm, owns 80.1% of parent Chrysler, following the breakup of the former DaimlerChrysler on Aug. 3 of this year.

Sales for the Chrysler brand were also down about 7% for the month of October. The models Chrysler announced it will kill through 2008 are mostly Chryslers, including the convertible version of the Chrysler PT Cruiser, the Chrysler Pacifica, and the Chrysler Crossfire. The Dodge Magnum also will be axed.

All are slow sellers, although Magnum sales were up in October. Chrysler sales were down only about 3.5%, to about 1.7 million, through the first 10 months of this year. Chrysler continues to be the No. 4 seller in the U.S. market.

Toyota: Ready to Pass GM By?

Currently, Toyota Motor (TM) is the No. 2 seller in the U.S. market, having passed two of Detroit's Big Three. In 2006 Toyota outsold then-DaimlerChrysler for the first time for the full year. It has never outsold the perennial No. 2, Ford (F), for the full year, but it could this year. General Motors (GM) continues to be the biggest seller in both the U.S. and the world, and there has been speculation that Toyota could overtake the U.S. carmaker on a worldwide basis as early as next year.

Toyota and its Lexus luxury-vehicle division each had record sales in October, by a fraction of a percentage point. Combined sales for the two brands plus the Scion youth brand increased 0.5% from the year-ago month.

Since the beginning of the year, Toyota's U.S. sales are up 3.5%, to about 2.2 million. The Tundra full-size pickup (BusinessWeek.com, 1/30/07) is also a big gainer for Toyota. Tundra sales in October were up 71% for the month, to 17,868, and 59% year-to-date, to 162,348.

The redesigned Tundra got off to a rough start when it was launched last spring, with Toyota resorting to incentives to its dealers as high as $5,000 move the models off their lots.

Dealers reported the incentives began to abate after a couple of months, but according to Automotive News, Toyota is still offering $2,500 in dealer incentives on 2007 models.

GM's Market Share Gains

GM slipped about 1% in October, to 310,008. Still, the news isn't that bad for the General, which saw its unadjusted number move up about 3% over October, 2006. That was the third month in a row that GM sold more vehicles than the year-ago month.

That meant GM gained market share for the fourth month in a row, said Paul Ballew, executive director for global market & industry analysis at GM. GM's market share was about 25% in October, vs. 24.4% a year earlier. Year-to-date through October, GM's market share was off a fraction of a percentage point, to 23.9%.

Ballew said the redesigned Cadillac CTS (BusinessWeek.com, 10/22/07) is off to a good start, with October sales of 6,586, 75% ahead of the year-ago month. GM is also launching a redesigned Chevy Malibu with a big advertising blitz. But, with less than a full month's sales of the new model for comparison, Malibu sales were lagging behind the year-ago month.

The new Malibu is attracting about 50% "conquests" from other brands, compared with about 40% for the old model, Ballew said.

Mark LaNeve, vice-president for vehicle sales, service, & marketing at GM North America, said that GM realizes it will take time, probably years, to get Honda Accord (HMC) and Toyota Camry buyers to consider a Chevrolet.

"We've been very up-front with this launch that we're competing with the Honda Accord, the Toyota Camry, and the Nissan Altima. We're not naive about how hard it's going to be to conquest those customers," he said.

Ford Falls Again

Ford sales fell more than Chrysler. Total Ford sales were down about 10% for October, to 195,462, with a decline of about 13% year-to-date, to just under 2.2 million.

George Pipas, Ford's U.S. sales analysis manager, said that not counting fleet sales, Ford's retail market share is stable at about 13% of the U.S. market. "It's an important goal in '07 and '08 to stabilize the retail share. Our plan and our assumption is around 13%. After years of decline, it was important to arrest that, and do it on the back of new products," Pipas said.

"Make no mistake, our ultimate plan is to grow, and do it profitably," Pipas said. "But we know that consumers can't be turned around automatically, just because we've introduced a new product."

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