Sunday, December 03, 2006

Ford stumbles to 4th place in sales

Ford Motor Co. tumbled to fourth place in the U.S. auto market last month, trailing Toyota Motor Corp. and DaimlerChrysler AG for the first time, after sales of its F-Series trucks fell sharply.

General Motors Corp. extended its lead as No. 1 after increasing sales 6 percent in a tough auto market characterized by flagging consumer demand.

Despite rising interest rates, falling home prices and volatile gas prices, "we've been able to execute the turnaround plan," said Paul Ballew, GM's executive director for industry analysis.

GM benefited from solid demand for its new, large sport utility vehicles, particularly high-trim and luxury versions. Sales of the Cadillac Escalade more than doubled in November. GM is now rolling out its new large pickups.

While GM's results reassured industry analysts, Ford's slide heightened concerns about the Dearborn automaker's future.

"Ford, no matter how you look at it, was an amazing disappointment," said George Magliano, a New York-based analyst with forecasting firm Global Insight.

Ford also announced fresh cuts in fourth-quarter vehicle production Friday and predicted a tough 2007.

Both GM and Ford announced production cutbacks for the first quarter of 2007, a 9 percent reduction at GM from prior year levels and 14 percent at Ford.

Ford's domestic brand sales fell 10.6 percent in November, partly due to a planned drop in Taurus sales to rental car companies as the automaker ended production of its one-time best-seller.

Ford's share of the market fell to 13.9 percent, two percentage points below year-earlier levels.

Its sales decline helped push the combined market share of Detroit's automakers to a historic low of 51.9 percent, according to Autodata Corp.'s measure of domestic brands, which excludes foreign-based subsidiaries.

While U.S. car and truck sales rose 2.9 percent from year-earlier levels, the seasonally-adjusted selling rate -- a better gauge -- slipped to a weak pace of 16.04 million vehicles from 16.06 million a year ago.

Toyota's sales jumped 15.9 percent, expanding its share of the U.S. market by nearly two points to 16.4 percent.

"We're pleased in that the results signal that we're satisfying today's buyers," said Toyota spokesman Xavier Dominicis.

Last month marked the second time Toyota overtook Ford in the U.S. market. Already ahead of Ford globally, Toyota first outsold Ford in the United States in July.

Auto analyst Magliano said Toyota keeps advancing "across the board, with small cars, midsize cars, light trucks."

Sales of DaimlerChrysler's Chrysler Group rose 2.9 percent, helped by demand for new vehicles including the Jeep Wrangler and Dodge Nitro, a compact SUV.

Its German sister brand Mercedes-Benz reported a 20.7 percent sales surge, reflecting strong demand for the redesigned S-Class and E-Class sedans.

According to Autodata, DaimlerChrysler's total U.S. sales exceeded those of Ford and its European brands, Volvo, Jaguar, Land Rover and Aston Martin. (Aston Martin is up for sale.)

Industry analyst George Pipas of Ford said 2007 would be difficult. Monthly sales increases "will be rare" next year, he predicted.

Ford revealed weaknesses across its range. Poor performers included the Ford Freestyle crossover, with sales down 40 percent, and the Mercury Montego sedan. Its sales fell 42 percent.

Ford is under mounting pressure as GM and Toyota roll out new pickups, taking aim at one of Ford's most lucrative products.

GM has already launched some of its new trucks, such as the Chevy Silverado, and Toyota's new full-size Tundra is scheduled to go on sale in February.

Sales of Ford's F-Series pickups fell 16 percent in November, a drop analysts attribute to the Chrysler Group's aggressive discounting of the Dodge Ram truck.

Dodge offered incentives averaging $5,741 per truck last month -- more than $1,000 above Ford's $4,467 F-Series discounts, according to, a Web-based industry research firm.

Edmunds analyst Alex Rosten said Ford's truck sales suffered because it lagged Chrysler in bringing out incentives.

Pipas said Ford initially focused on clearing out inventories of 2006 F-Series trucks. "We didn't pull the trigger on 2007 model advertising or our year-end sales event until very late in the month," he said. "We probably paid the price for that."

Overall, however, Ford doled out higher incentives than its Detroit rivals, with discounts averaging $4,231 per vehicle in November, up $1,402 from year-earlier levels, according to Autodata.

Chrysler increased its incentives by $209 to $3,735 per vehicle, while GM -- formerly the big spender -- reined in discounts by $306 to an average of $3,011.

After losing $10.6 billion in 2005, GM is trying to improve its profitability by reducing discounts and scaling back sales to fleet customers. They tend to be less lucrative than retail sales, which are sales to car dealers.

GM's retail sales rose 11 percent in November, while fleet sales fell 7 percent, Ballew said. He attributed the 7.9 percent drop in GM car sales to a decline in sales to car rental companies.

"We've seen pricing and mix improve," he added. GM's average transaction price -- an important gauge of profitability -- had risen 6 percent from year-earlier levels, Ballew said. "We have stabilized our market share. We're getting some lift from our new products. It was a solid month for us."

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