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June auto sales resembling May -- GM executive

From Reuters | June 22,2007

Industry auto sales so far this month are resembling the trend set in May, General Motors Corp's (GM.N: Quote, Profile, Research) chief sales analyst said on Thursday, adding that the automaker would cut daily rental sales further in June.

"June is pretty comparable to May right now," Paul Ballew said, speaking to reporters at a briefing in Detroit. U.S. auto sales rose 0.9 percent in May, adjusted for an extra selling day. On the same basis, GM's sales rose 5.6 percent.

Ballew also said GM would reduce U.S. fleet sales to daily rental companies by at least 20,000 vehicles in June, affecting the automaker's overall sales volume for the month.

GM has been sticking to a strategy of cutting low-margin fleet sales in an effort to increase the resale value of its vehicles and return to profitability.

The reduction in June would cut GM's fleet sales by 100,000 vehicles in the first half of this year.

Ballew did not provide a forecast for overall June sales but said the industry continued to be challenging in the first half of the year.

U.S. automakers have been struggling amid high gasoline prices, a weak housing market and competition from Asian rivals.

GM, which has lost more than $10 billion in the past two years, was overtaken by Toyota Motor Corp (7203.T: Quote, Profile, Research) as the world's largest automaker in the first quarter. GM's U.S. sales this year were down 3.8 percent through May as it cut back on fleet sales. 

GM's vice president of sales, Mark LaNeve, said it was too early to comment on GM's performance in June.

"There are still ten days left to go," LaNeve said. "But we are going to try like hell (to sell more cars)." GM is offering as much as $4,000 in discounts or zero-percent financing on some sport utility vehicles. Smaller deals are available on many other vehicles.

Citigroup analyst Jon Rogers earlier this week estimated June's sales outlook for light vehicles would come in at a seasonally adjusted rate of 16.7 million vehicles, up from 16.2 million a year earlier.

"GM and Ford sales are tracking down in the mid-single digits through mid-month on slow retail sales and continued cutbacks in fleet volumes," Rogers said, adding gains at Asian automakers would offset those losses.

LaNeve said the overall U.S. auto market remained "challenging" but "not awful."

Speaking about pickup trucks, which rely heavily on buyers in industries like construction, LaNeve said he does not expect any "additional compression" in the U.S. full-size pickup truck market.

Pickup sales declined 3.5 percent through May this year. But full-size pickups still account for 13.2 percent of the overall U.S. market, unchanged from a year ago.

Analysts expect pressure for margin-eroding discounts to remain strong for the remainder of the year.

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