Automakers cheer lower fuel prices

Published 9:00 pm Wednesday, November 1, 2006

DETROIT – Lower gas prices boosted truck sales in October, helping two of the domestic Big Three and Toyota Motor Corp. post sales gains compared with a dismal October last year.

General Motors Corp. led all automakers with a 17 percent increase, fueled by a 33 percent rise in truck and sport utility vehicle sales. GM car sales dropped nearly 2 percent.

On a percentage basis, GM outperformed Toyota Motor Corp., which reported Wednesday a 9 percent sales increase.

Ford Motor Co. also reported a big sales gain, but DaimlerChrysler AG posted weaker U.S. sales than in October 2005.

Paul Ballew, GM’s chief of global market and industry analysis, said the decline in gas prices from a peak of $3 a gallon earlier this year helped the whole industry and truck sales in particular.

“What we’re seeing right now is not a movement back into utilities, but at $2.20 a gallon, some of the pressure which was really dampening demand in the utility space has been lessened,” he said. “We are not seeing the mass migration out of utilities into cars or crossovers that we saw in the spring.”

Toyota and Lexus sold 4 percent more cars last month, but their truck sales were up 16 percent. The company’s performance, though, wasn’t enough to unseat Ford as the No. 2 vehicle seller in the U.S.

Ford sold a total of 214,806 vehicles in October, compared with Toyota’s 189,011. GM sold 297,401 vehicles.

The sales improvements came in part because they were compared with a dismal October 2005, when sales plummeted for nearly all manufacturers following an incentive-fueled summer frenzy.

Ford’s U.S. sales were up 8 percent, thanks mostly to a 22 percent increase in car sales. Sales of trucks and sport utility vehicles inched up 0.8 percent from the year-ago period. The figures include the Ford, Lincoln, Mercury, Jaguar, Volvo and Land Rover brands.

DaimlerChrysler, meanwhile, reported that its sales dropped almost 2 percent attributed mainly to a decline at the U.S.-based Chrysler Group. But that was partly offset by a 12 percent increase at Mercedes-Benz, which posted a record October sales figure.

Chrysler’s car sales slipped 33 percent, while its truck sales gained 9.2 percent. The company sold 159,586 vehicles last month, compared with 164,814 in 2005.

Both GM and Chrysler said car sales dropped in part because of reduced sales to rental car companies and other fleet buyers. Automakers have been trying to wean themselves off fleet sales because they yield less money than selling to individuals.

At Honda Motor Co., sales were up slightly in October. Nissan Motor Co. reported a 4 percent increase in sales over the same month last year.

Chrysler and Ford, as well as General Motors Corp., have struggled recently to match the offerings of Asian competitors as consumer tastes shift to smaller, more fuel-efficient vehicles. The Big Three have long relied on high-margin pickups and SUVs for most of their sales and are now trying to cope with huge inventories by slashing production.

Ford said it expects to further cut production in the first six months of 2007 – by 8 percent to 12 percent from the same period this year – as it works to bring manufacturing in line with lower demand for its products. For 2006, the company has said production would be down about 9 percent from 2005.

“We are very serious about aligning inventories with demand,” Al Giombetti, sales and marketing president for Ford and Lincoln Mercury, said in a written statement. “Our dealers did an outstanding job with the 2006 model sell-down program, and we took a painful but necessary action to reduce fourth-quarter production.”