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US April car sales far below forecasts

From reuters| April 30,2007
US auto sales have dropped far below expectations for April, a Ford Motor Co executive said, characterising industry-wide results as "terrible" as rival General Motors Corp rolled out an incentive programme to boost crucial month-end deals.

"This month is terrible," Ford chief sales analyst George Pipas said in describing the unexpectedly weak industry-wide performance. "We are not even close to where we expected to be in April."

Pipas said industry sales volume appeared to be down 10 per cent to date before seasonal adjustment but said he expected Ford's US retail share to hold steady at around 13 per cent.

Pipas said the spillover from weaker housing to other areas of the economy appear to be affecting consumers, but added that many of these same factors were also present in March.

"I have a hard time explaining why April is so weak," he said.

Ford and other automakers are due to report April US sales on May 1. GM vice chairman Bob Lutz said earlier this month the crisis in the US mortgage market had hurt US auto sales in April.

Lutz said he did not know how GM's sales had performed, but said he expected the whole automotive sector would feel the impact of the stress on the mortgage market.

GM responded to the slack sales climate on Friday by offering lower-interest financing to customers with weaker credit ratings through this weekend in an effort to boost sales for April, according to sources familiar with the sales plan.

GM will offer reduced interest rates to customers whose credit is assessed at two of its lower rating levels on all brands except Saab, the sources said.

Detroit automakers had forecast a flat to slightly weaker vehicle market going into 2007 before the pressure intensified on subprime lenders.

Cautionary remarks

The comments from Pipas followed cautionary remarks from listed auto dealership groups on the expected impact from the slowing housing market.

Ford's US sales were down 13 per cent in the first quarter and GM's sales were down 5.5 per cent, while Toyota sales rose 11 per cent.

Ford shares closed down 1.8 per cent at $8.05 on the New York Stock Exchange. Shares of GM closed down 2.7 per cent at $31.56.

Separately, GM said in a filing with the US Securities and Exchange Commission that its chief executive, Rick Wagoner, Lutz and chief fin-ancial officer Fritz Henderson had taken voluntary cuts in their base salaries to support the automaker's turnaround efforts.

 

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