Tuesday, June 04, 2002
Automakers looking up
Vehicle sales hit speed bump in May, but GM raises earnings forecast
By ED GARSTEN
AP Auto Writer
DETROIT The two biggest U.S. automakers, General Motors Corp. and Ford Motor Co., each reported double-digit percentage sales declines in May while the Chrysler Group of DaimlerChrysler AG showed a 4 percent increase for its second consecutive monthly sales gain.
Numbers crunchers for GM and Ford called May an aberration after an unexpected 5 percent overall decline in sales of new cars and trucks. Analyst David Healy of Burnham Securities called it pretty lousy.
But Paul Taylor, chief economist for the National Auto Dealers Association, said a moderation in sales was to be expected, especially in light of the 6 percent national unemployment rate, which he said is disqualifying some buyers.
GM said Monday its May sales were down 12.4 percent from a year ago, reflecting a 12 percent decline in trucks and a 13 percent drop in passenger cars. For the year, GM sales are up 3 percent compared with the first five months of 2001.
Despite the May decline, GM boosted its second-quarter earnings forecast. GM estimates it will earn $2.50 a share for the April-June period excluding its Hughes Electronics unit, up from prior guidance of $2 per share. Analysts surveyed by Thomson Financial/First Call were expecting earnings of $2.16 a share for the quarter.
Including Hughes, the second-quarter target is approximately $2.40 per share, up from $1.90 per share.
For the full year, GM estimates its earnings, excluding Hughes and special charges, will be $6 per share, up from prior guidance of $5 per share. Analysts were expecting earnings of $5.52 a share for the year, according to Thomson Financial/First Call.
Including Hughes, GM said its 2002 earnings guidance is about $5.60 per share, up from $4.60 per share.
GM said it raised its earnings forecast because of its focus on cost-cutting and plans to step up production by about 400,000 units.
Its Saab unit, meanwhile, reported a 33 percent increase in sales from May 2001.
One month does not a trend make, said Paul Ballew, GM executive director for market and industry analysis.
When we look at the year as a whole ... we're still confident, he said during a conference call with securities analysts.
GM shares closed down 90 cents at $61.25 on the New York Stock Exchange.
Ford reported an 11.5 percent decline in sales for its Ford, Lincoln and Mercury brands last month compared with May 2001. Its Volvo unit reported a 34 percent drop-off, but the Jaguar and Land Rover brands both recorded record sales.
Retail sales for Ford vehicles were down 16 percent last month, while sales to fleets were up 2 percent, said George Pipas, the automaker's sales analysis manager.
For most of the year, fleet sales had suffered as rental car agencies reduced their inventories to reflect the drop in travel after Sept. 11.
We're looking forward to June and we'll see a correction of the aberration of May, Pipas said.
He said Ford's market share of about 20 percent is not where we want it to be, but our market share is trending upward.
Ford shares lost 34 cents to $17.31 each in Monday trading.
Chrysler's improvement was powered mainly by strong sales of its minivans, which were backed by a national incentive program, the Jeep Liberty, Dodge Ram pickup and PT Cruiser.
Taking note of the dip in industry sales, Chrysler vice president of sales and marketing Gary Dilts said the company is not worried about the industry.
Our assumption is the industry is still healthy, said Dilts.
DaimlerChrysler shares fell 88 cents to $48.50 each.
Art Spinella, who heads CNW Marketing of Bandon, Ore., said the automakers will have to fatten incentive programs in order reverse May's results since buyers have become accustomed to generous cash-back offers.
I think by this time next month we'll see a pretty extensive incentive war going on, Spinella predicted.
Japanese automaker Toyota Motor Sales USA, meanwhile, reported its best month ever, with a 3.6 percent increase in sales compared with May 2001.
Among other automakers, American Honda Motor Co. reported an 11 percent sales decrease, while Nissan North America Inc. saw its sales rise 2 percent.
South Korean automaker Hyundai Motor America Inc. said last month was its best sales month ever and its 16th consecutive record month.
Sales of the Santa Fe, Hyundai's small sport utility vehicle, were up 39 percent in May compared with May 2001.
Strong sales of its new MINI and 7 series helped make May the best month ever for BMW of North America Inc.
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