U.S. New Car Sales Drop in October 2005

DETROIT November 1, 2005; Dee-Ann Durbin writing for the AP reported that U.S. auto sales fell sharply in October, dampened by hurricanes, fidgety consumers and high gas prices. Demand was down after a summer of heavily hyped discounts, and automakers warned that they don't expect an upswing in November.

General Motors, Ford and Nissan reported big declines Tuesday, while Toyota and Honda edged up and DaimlerChrysler's sales were flat. Sport utility vehicles took the biggest hit across all makers. Sales of the Ford Explorer, Lincoln Navigator, GMC Yukon, Hummer H2 and Toyota Land Cruiser were all down 50 percent or more.

October sales were down 11 percent industrywide. The seasonally adjusted annual sales rate was 14.7 million vehicles, indicating what sales would be for the full year if they remained at the same pace for all 12 months, according to Autodata Corp. Full-year sales for 2004 were 17 million.

DaimlerChrysler AG's Chrysler Group responded by putting a $1,000 incentive on all 2005 and 2006 vehicles. No other automaker made a similar announcement, although GM said it would remain competitive on incentives.

"We've got a consumer out there where the confidence levels have been slipping and they're concerned about the monthly budget," said Gary Dilts, Chrysler's senior vice president of sales.

"We feel the need to put some sort of incentive out there that answers the question, 'Why buy now?'" he said.

General Motors Corp., the world's biggest automaker, said its U.S. sales fell 22.7 percent in October from a year ago, led by a 30.3 percent decline in sales of trucks and SUVs. GM's car sales fell 10.6 percent for the month. Overall, GM's sales fell 2.7 percent for the first 10 months of the year.

Paul Ballew, GM's executive director of market and industry analysis, said it was the industry's worst month since 1998. But he said October must be viewed in the context of the summer sales blitz, which was fueled by U.S. automakers' employee-discount incentives. This year is still on track to be the second or third best in history for U.S. auto sales, Ballew said.

Meanwhile, GM's debt was slashed deeper into "junk" territory Tuesday after Moody's Investors Service lowered its long-term rating due to uncertainty about the company's massive restructuring.

Ford Motor Co.'s U.S. sales fell 23 percent in October from a year ago. Sales of Ford, Lincoln and Mercury trucks and SUVs fell 30 percent compared to last October, while car sales slipped 3.7 percent. Ford's popular F-series truck saw sales fall 32 percent.

"October wasn't a very good month for anybody," said George Pipas, Ford's U.S. sales analysis manager. "It was pretty much weak from the start and showed little improvement as the weeks progressed."

Ford said its new Ford Fusion, Mercury Milan and Lincoln Zephyr midsize sedans were notable exceptions, exceeding Ford's expectations in their first month in dealerships. Pipas said Ford expected to sell 2,700 Fusion sedans in October but sold more than 4,000. Ford's car sales rose 7 percent for the year, but overall sales fell nearly 3 percent.

Chrysler Group said its car sales rose a whopping 37 percent, and the Dodge Stratus sedan had its best October in nearly 10 years. But truck and SUV sales fell 9.5 percent and Chrysler's overall sales were flat for the month. Chrysler's sales were up 6.9 percent for the first 10 months of the year.

Dilts said Chrysler's retail sales fell by double digits but were propped up by fleet sales to corporations. He said Chrysler's fleet business accelerated with the launch of the LX vehicle line, which includes the Chrysler 300 sedan and Dodge Charger. The Jeep Grand Cherokee and minivans were also big sellers to corporate fleets.

"That's very good business for us. That's not a business we have been in," Dilts said.

U.S. automakers ended employee-discount programs — which let consumers pay the employee price — in the first week of October. They were expecting some payback after phenomenal sales this summer. GM began its discount in June, and Ford and DaimlerChrysler AG followed in July.

Asian automakers stayed out of the employee discount fray, but several of them experienced a downturn in October anyway.

Nissan Motor Co. said U.S. sales were down 19 percent, including a 23 percent dip in car sales. Nissan's overall sales were up 12.5 percent for the year.

South Korean automaker Hyundai Motor Co. said sales were down 7.7 percent in October, led by a 9.7 percent decrease in car sales. Hyundai's overall sales were up 8.4 percent for the year.

But Toyota Motor Corp. said its overall U.S. sales rose 5.2 percent in October, boosted by a 12.6 percent jump in car sales. Toyota's truck and SUV sales were down 4 percent for the month. Its hybrid Prius continued to dazzle, with sales up 68 percent over last October.

Toyota's sales rose 10.7 percent for the first 10 months of the year. Jim Press, president and chief operating officer of Toyota Motor Sales U.S.A., said he's optimistic heading into the last two months of the year.

"The incentive-induced daze is lifting, and the hurricane season is coming to a close," Press said.

Honda Motor Co. reported an increase of 4 percent, which the company attributed to strong sales of its redesigned Civic sedan as well as the new Ridgeline pickup. Honda's car sales were up 7 percent and truck sales were flat. The automaker's sales were up 6 percent for the year.

Sales percentages were adjusted for differences in the number of selling days. There were 26 selling days in October 2005 and 27 in October 2004.