GM, Ford, Toyota Plunge as Buyers Reject Big Trucks (Update3)

By Greg Bensinger and Alan Ohnsman

July 1 (Bloomberg) -- General Motors Corp., Toyota Motor Corp. and Ford Motor Co., the biggest auto retailers in the U.S., said June sales plunged as fuel prices above $4 a gallon drove consumers away from gas-guzzling trucks.

GM sales fell 19 percent, Ford was down 28 percent and Toyota dropped 21 percent. Honda Motor Co. and Volkswagen AG, which rely on cars for the bulk of their sales, each rose about 1 percent.

The automakers' sales releases support analysts' projections that said companies with the largest vehicles would tumble the most. Consumers now paying a record $4 a gallon for fuel couldn't find enough gasoline-saving small cars on dealers' lots.

``The vehicles that people want are in short supply because the industry has turned on a dime in terms of demand and supply can't quite handle that,'' Alan Baum, director of automotive forecasting for Planning Edge in Birmingham, Michigan, said in a Bloomberg Radio interview. ``You'll continue to see a decline for the next several months.''

For the second straight month, Ford's F-Series large pickup, perennially the best-selling vehicle in the U.S., was outsold by four cars: Toyota's Corolla and Camry and Honda's Civic and Accord. Nissan Motor Co. reported an 18 percent total decline.

Ford: Two Gainers

Among the more than 20 U.S. models Ford sells, only two posted gains in June: the Mercury Milan and Ford Fusion sedan. Sales of the Fusion gained 18 percent and the Milan 7.6 percent. Each of Ford's four sales divisions fell by at least 22 percent.

Ford's percentage decline is higher because the previous year's results included 5,570 sales from the Land Rover and Jaguar divisions, now owned by India's Tata Motors Ltd.

Sales of Ford's crossover SUVs such as the Lincoln MKX, a bright spot in previous months, fell 18 percent in June.

The SAAR, or seasonally adjusted annual rate, a measurement of sales without regard to seasonal fluctuations, probably fell to 13.2 million cars and light trucks last month, down 16 percent from 15.7 million a year earlier, based on a Bloomberg survey of 30 analysts and economists. That would be the lowest since March 1993.

Chrysler LLC will report a 25 percent decline, according to a survey of five of the analysts. U.S. auto sales are on a pace to plunge to 14.5 million units for 2008, the lowest in 15 years, according to Deutsche Bank. The annual industry average this decade has been 16.8 million.

Selling Days

Last month had three fewer selling days than June 2007. That means automakers may report figures roughly 12 percentage points lower than the analysts' adjusted estimates. By that measure, Ford's 28 percent decline was in line with the analysts' forecasts of a 19 percent drop.

A decrease would extend the industry's sales slump to eight straight months, the longest tumble in seven years. Average gasoline prices in June topped $4 a gallon for the first time and consumer confidence reached a 16-year low, prompting more Americans to postpone purchases of new vehicles.

Inventories of compact cars and gasoline-electric hybrids are ``going down at a rate we've never really seen before, and automakers are caught a bit unprepared,'' Jesse Toprak, an Edmunds.com analyst in Santa Monica, California, said in an interview. ``It might take several years to fully meet the consumers' demands.''

GM Production

GM is ramping up production of cars and smaller SUVs by almost 50,000 units this year in response to consumers' ``close attention to fuel-efficiency,'' sales chief Mark LaNeve said in a June 23 conference call with reporters.

More than 40 percent of Americans who said they are spending less than they did six months ago pointed to the price of gasoline as the reason, according to a Bloomberg/Los Angeles Times survey.

Forty-two percent of Americans said they've delayed buying a new vehicle indefinitely because of fuel prices, according to a June 25 survey by Kelley Blue Book of Irvine, California.

A gallon of gasoline rose 2.8 percent from May 31 to a record $4.09 on June 30, according to motorist group AAA.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

Last Updated: July 1, 2008 14:02 EDT

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