Big Auto Sales Drops for the Big Three

Automakers got hit where it hurts in February, with U.S. sales of their most profitable vehicles — trucks, sport utilities and large sedans — plunging as consumers reacted to high gas prices and the possible recession. General Motors Corp. and Ford Motor Co. announced second-quarter production cuts in the face of the falling sales.

GM reported a sales decline of almost 13 percent for the month while Ford's sales slumped 7 percent, Chrysler's tumbled 14 percent and Toyota's fell 3 percent. It was expected to be a difficult month for automakers as consumer confidence continued to slide. Declines in home construction also have significantly weakened truck sales.

Mark LaNeve, GM's vice president for North American sales and marketing, said tightening automotive credit standards may also be hurting sales.

"On the edges of a difficult market, it's one of those things that makes it more difficult," LaNeve said.

If the February sales rate held steady for the full year, U.S. sales would be 15.4 million units in 2008, according to Autodata Corp. That's down from a rate of 16.6 million units last February.

Honda Motor Co. bucked the trend, posting a 5 percent increase in U.S. sales as booming sales of its small cars and crossovers picked up the slack from its slumping Ridgeline pickup and luxury sedans. The subcompact Honda Fit saw sales jump 62 percent. Honda's sales were up nearly 2 percent for the first two months of the year.

GM said its sales decline was led by a 19 percent drop in sales of trucks and SUVs. Sales of Chevrolet full-size pickups were down 29 percent for the month. Large sedans didn't fare much better; sales of the full-size Buick Lucerne were down 26 percent. GM's sales dropped 6 percent in the first two months of the year.

GM said the comparison with last February was a tough one, since retail sales hit a high mark for the year in February 2007. Still, the company responded to the downturn by cutting North American production by 5 percent in the second quarter to 1.08 million vehicles.

LaNeve said that while a weeklong strike at American Axle and Manufacturing Holdings Inc. has idled some GM plants, the company has enough inventory of trucks and SUVs to last at least 60 to 90 days.

"Right now it's not a threat to us doing business given our relatively healthy inventory situation," he said.

Toyota Motor Corp. said its car sales fell 4 percent while its truck sales were flat for the month. The aging Avalon full-size sedan was down 30 percent compared to last February. Toyota saw particular weakness in its luxury Lexus division, where sales of its flagship LS 460 sedan fell 25 percent for the month. Toyota's overall sales were down 2.5 percent for the year.

Mark Templin, the general manager of the Lexus division, said U.S. luxury sales fell in the first two months of 2008, but the company is still predicting that luxury sales will end the year flat compared to 2007.

This year is expected to be the slowest in a decade for the U.S. auto industry, but automakers are still predicting sales will pick up in the second half thanks to the federal stimulus package and pent-up demand. In the meantime it will be tough going, and the biggest casualties are the kinds of expensive vehicles automakers counted on for profits in the past.

"These segments could get tougher before they get better," said Randy Pflughaupt, vice president of marketing for Toyota's U.S. division.

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