US Auto Sales Wobble; GM Plunges

Plagiarist! I think this is the default title for Reuters-sourced stories. One just does not see “wobble” enough in the news. I love it.

Bad news for workers, bad news for shareholders (maybe), bad news for short-selling hedge funds, good news for lingering Equity groups looking for a deal.

General Motors Corp.’s (GM) results were particularly weak, with June sales down 21.3% from a year ago amid weaker retail sales and continued reduction in sales to rental-car fleets. The company’s shares fell as much as 4.8% after hours following a shortened holiday trading session.

Ford Motor Co. (F) and DaimlerChrysler AG’s (DCX) Chrysler Group posted more modest declines for the month. Unlike its rival GM, Ford’s shortfall was entirely due to a decline in sales to fleet customers, notably rental-car companies.

Japanese auto makers defied the downturn, however, with Toyota Motor Corp. ( TM), Honda Motor Co. (HMC) and Nissan Motor Co. (NSANY) posting double-digit increases as customers flocked to their fuel-efficient cars and responded to their heavy incentives.

Interestingly,

For the past 18 months, GM has been working to lessen its reliance on incentives, such as discounts and low financing programs, in order to boost its profitability and improve the resale value of its new vehicles.

I’d say that hasn’t worked out the way they’d have liked? A last-minute ‘go’ was beaten by Toyota, anyway:

GM boosted spending on incentives late in the month in an effort to lift sales, only to be “surprised” by the incentive spending at some rivals, company sales analyst Paul Ballew said on a conference call. Toyota”>Toyota, for example, offered rebates starting June 15 of as much as $3,500 or no-interest loans on the new Tundra pickup truck. The offer runs through July 31.

There’s that easy credit again – I also doubt that’s really a “no-interest” loan, but I could be wrong. So US auto sales have declined. Meanwhile, Asian automakers are increasing their shares of the US market.

Toyota, Honda Motor Co. and Nissan Motor Co. each boosted sales by more than 10 percent to lead the Asians to 42.7 percent of the U.S. market, according to Bloomberg data. U.S. automakers, paced by a surprise 21 percent decline at GM, fell to a record low. Overall industry sales slid 3 percent from June 2006 levels.
….
The U.S. brands of GM, Ford and Chrysler accounted for 50.3 percent of the U.S. market, according to Bloomberg data, down from the previous low of 50.6 percent in January. The previous high for the Asians was 42.1 percent, also in January.

By the market, there isn’t a great deal to distinguish the American firms

Chrysler

Ford

GM

From the Asian firms:

Honda

Nissan

Toyota

The systematic difference that I see between the two are that the US automakers are being targeted by Private Equity, while cashing in on some of their divisions for – we presume – the popular purpose of buying their way out of future obligations to future retirees. Everyone’s shares seem to be up (we’ll see how that looks this time tomorrow), but I reckon only the latter 3 firms are so for reasons of sales. I also wonder if any Hedge Funds had been betting against Detroit, and by how much.

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