Retail New-Vehicle Sales Drop Dramatically in Early October

WESTLAKE VILLAGE, Calif.--Oct. 1, 20054, 2005--Retail new-vehicle sales in the first nine days of October were down 33 percent versus the same period a year ago, and down 44 percent versus the first nine days of September, according to the Power Information Network (PIN), the industry's premier source for real-time automotive monthly retail sales data.

The key drivers of this trend include a lack of high-impact incentives from the major automakers, higher gas prices, low inventory levels and a possible market adjustment due to exceptionally strong sales during the summer months, according to Tom Libby, senior director of industry analysis at PIN.

Every one of the nine major new-vehicle manufacturers suffered a retail sales decline in early October versus a year ago, with the two traditional domestics down the most. Retail sales of General Motors and Ford Motor Company new vehicles were down 57 percent and 45 percent, respectively, compared to early October of 2004.

American Honda had the smallest decline at 8 percent, followed by Toyota Motor Sales U.S.A. at 14 percent. DaimlerChrysler was off 32 percent and Nissan North America recorded a 21 percent decline.

"The aftermath of the employee pricing programs is having a dramatic impact on automotive retail sales in October," Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "A lot could happen between now and the end of the month, but at this point, we're on track for an October like we haven't seen since the early 1990s."

The retail market share leader for the first nine days of October was Toyota Motor Sales with 18.2 percent of the retail market (compared to 14.2% a year ago). Ford Motor Company followed with 15.6 percent (versus 18.8%) and GM was third with 14.6 percent (versus 23%). DaimlerChrysler followed with 13.8 percent (versus 13.5%) and American Honda captured 13.6 percent (versus 9.9%). Nissan North America had an 8.4 percent share (versus 7.1%).

"It will be interesting to see if the automakers, particularly GM and Ford, can hold back on incentives if their sales and share continue to slip," Libby said. "I expect they will find a way to boost sales. I doubt that they will just sit back and let this trend continue."

The average price customers paid for a new vehicle in the first nine days of October was $26,123 -- about the same as a year ago. The average new-vehicle transaction price actually rose slightly for eight of the nine major manufacturers, but prices have dropped 2.9 percent for GM vehicles, suggesting GM's value pricing strategy is providing prices very competitive with incentive-driven prices of a year ago, according to Libby.

Since the successful employee discount incentive programs cleared out much of the 2005-model inventories, the new vehicles being sold in October are relatively fresh. The average number of days the typical new vehicle sat on dealer lots in early October before being sold was 54, down from 74 a year ago. The days on the lot for domestic vehicles for the first nine days of October was down 20 days versus a year ago, while Asian-branded vehicles were down 10 days and European-branded vehicles were down 12 days. The typical GM vehicle sat for 61 days -- down an industry-leading 35 days from October of 2004.

About Power Information Network (PIN)

PIN's automotive solutions are based on the collection and analysis of daily new- and used-vehicle retail transaction information from more than 10,000 automotive dealership franchises in North America. PIN's industry-leading automotive solutions incorporate consumer demand and sales information to improve business for automotive dealers, manufacturers, lenders, and other companies in the industry. Additional information is available at www.powerinfonet.com

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction. The firm's quality and satisfaction measurements are based on responses from millions of consumers annually. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

Founded in 1888, The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor's, McGraw-Hill Education and BusinessWeek. The Corporation has more than 300 offices in 40 countries. Sales in 2004 were $5.3 billion. Additional information is available at http://www.mcgraw-hill.com.