Homes slump and fuel price likely to hit US car sales
By Bernard Simon in Toronto
Copyright The Financial Times Limited 2007
Published: May 1 2007 03:00 | Last updated: May 1 2007 03:00
The US car and light-truck market shows signs of buckling under the weight of the housing slump and arenewed climb in petrol prices.
April vehicle sales, to be published today, are widely expected to be lower thanin March and a yearearlier.
Some carmakers have sought to boost demandin recent weeks withmore generous sales incentives.
"The indications we've had all month long arethat the weakness is very broad-based," George Pipas, Ford Motor's sales analyst, said yesterday.
"The question is whether this is a one-month thing, or whether we're heading to-wards a period of weaker consumer spending in the coming quarters."
Troy Clarke, head of GM's North American operations, said earlier that the weakening economy, higher interest rates and pressure on the subprime mortgage market would dampen second-quarter sales.
Fuel prices are again creeping up towards $3 a gallon. According to AAA, the motoring organisation, the average price for regular, unleaded petrol rose to $2.95 a gallon on Friday, from $2.66 a month earlier.
The price reached a record $3.06 in September 2005.
Analysts' estimates of April sales range between seasonally adjusted, annualised rates of about 15.7m and 16.3m vehicles, compared with 16.3m in March and 16.7m in April last year.
Brian Johnson, an analyst at Lehman Brothers, whose estimate is at the lower end of the range, expects that even Toyota, whose performance has far outstripped the three Detroit-based car-makers in recent years, will report "only very modest sales growth" in April.
Still, Mr Johnson said: "We wouldn't call a downturn quite yet, as the industry still has room to raise incentives from currentlevels to support sales over the next few months."
According to CNW, a market research group based in Oregon, the average discount on vehicle sticker prices widened to 19.4 per cent in April, from 18.6 per cent in March and 16.3 per cent a year ago.
GM dealers offered loan subsidies last weekendto buyers with low credit ratings.
"We're obviously trying to get some additional sales at the end of the month," GM said.
CNW estimates that Honda, whose incentivesare traditionally among the lowest, has lifted giveaways to an average of $3,119 per vehicle, from $2,687 in April last year.
GM and Toyota's percentage-change numbers for April will give a rosy view of their performance, because the two carmakers adjust sales figures to take account of the number of selling days.
There were two fewer selling days last month than in April of last year.
Other carmakers, such as Ford, insist that such adjustments provide an artificial picture, given more flexible dealer trading hours.
By Bernard Simon in Toronto
Copyright The Financial Times Limited 2007
Published: May 1 2007 03:00 | Last updated: May 1 2007 03:00
The US car and light-truck market shows signs of buckling under the weight of the housing slump and arenewed climb in petrol prices.
April vehicle sales, to be published today, are widely expected to be lower thanin March and a yearearlier.
Some carmakers have sought to boost demandin recent weeks withmore generous sales incentives.
"The indications we've had all month long arethat the weakness is very broad-based," George Pipas, Ford Motor's sales analyst, said yesterday.
"The question is whether this is a one-month thing, or whether we're heading to-wards a period of weaker consumer spending in the coming quarters."
Troy Clarke, head of GM's North American operations, said earlier that the weakening economy, higher interest rates and pressure on the subprime mortgage market would dampen second-quarter sales.
Fuel prices are again creeping up towards $3 a gallon. According to AAA, the motoring organisation, the average price for regular, unleaded petrol rose to $2.95 a gallon on Friday, from $2.66 a month earlier.
The price reached a record $3.06 in September 2005.
Analysts' estimates of April sales range between seasonally adjusted, annualised rates of about 15.7m and 16.3m vehicles, compared with 16.3m in March and 16.7m in April last year.
Brian Johnson, an analyst at Lehman Brothers, whose estimate is at the lower end of the range, expects that even Toyota, whose performance has far outstripped the three Detroit-based car-makers in recent years, will report "only very modest sales growth" in April.
Still, Mr Johnson said: "We wouldn't call a downturn quite yet, as the industry still has room to raise incentives from currentlevels to support sales over the next few months."
According to CNW, a market research group based in Oregon, the average discount on vehicle sticker prices widened to 19.4 per cent in April, from 18.6 per cent in March and 16.3 per cent a year ago.
GM dealers offered loan subsidies last weekendto buyers with low credit ratings.
"We're obviously trying to get some additional sales at the end of the month," GM said.
CNW estimates that Honda, whose incentivesare traditionally among the lowest, has lifted giveaways to an average of $3,119 per vehicle, from $2,687 in April last year.
GM and Toyota's percentage-change numbers for April will give a rosy view of their performance, because the two carmakers adjust sales figures to take account of the number of selling days.
There were two fewer selling days last month than in April of last year.
Other carmakers, such as Ford, insist that such adjustments provide an artificial picture, given more flexible dealer trading hours.
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