Automakers Slammed Into Reverse
By David Lee Smith
July 2, 2008
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Just when you thought buyers might be revving up for summer by driving new sets of wheels off car dealers' lots, up went oil prices. Between that and an otherwise soft economy, June car sales found "R" for reverse, hitting their lowest level in more than a decade.
Let's start with General Motors (NYSE: GM), which saw its U.S. sales drop by 18.5%. If you adjust for the higher number of selling days in the year-ago period, the decline was a less severe 8.3%. Light truck sales were down 16% for the month, while car sales fell 21.1%. All this tends to verify the wisdom of my Foolish colleague Joe Magyer, who kicked off this year by calling GM the "Worst Stock for 2008."
At Ford (NYSE: F), June sales plummeted by 28.1%. Beyond that, the company's truck sales -- its F-series has been the company's bread and butter -- fell by 35.6%. But the real laggard has been Ford's SUV sales, which have fallen 40% thus far in 2008.
Even Toyota (NYSE: TM) had a rough month. The company, which has been closing fast on Detroit's historic Big Three in the race for worldwide automotive supremacy, sold 21.4% fewer vehicles in the U.S. in June year over year. Adjusting for the differing sales periods, its June 2008 sales output dropped 11.5%. Toyota's Japanese rival Honda (NYSE: HMC) managed to eke out a 1.1% June sales gain.
Clearly, buyers are flocking toward smaller, more fuel-efficient vehicles. The diminutive Ford Focus sedan has seen its sales leap by 53% during the first half of this year.
Amid these clear trends, perhaps there's a Fool out there who can justify the lobbying group of 10 major automakers currently taking issue with governmental requirements that they raise their average fuel efficiency by 4.5% annually between 2011 and 2015. Sure, guys -- you continue to crank out your gas-guzzlers, and we'll continue to find better places for our investment dollars than your downtrodden stocks.
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