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The Honolulu Advertiser
Posted on: Wednesday, July 2, 2008

Almost all automakers post miserable June sales figures

By Tom Krisher and Dee-Ann Durbin
Associated Press

Hawaii news photo - The Honolulu Advertiser

General Motors sales consultant Mike Bechtolt hangs a banner in front of a GM dealership in Portland, Ore. Fuel-price rises have outpaced manufacturers' ability to shift to more efficient models.

DON RYAN | Associated Press

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DETROIT — Nearly all the major automakers reported steep sales declines for June, but for General Motors at least there was consolation: Toyota, its leading international competition, had it worse.

Even Toyota, with its flexible, efficient factories, couldn't make the shift from trucks to cars as quickly as American drivers. Its sales for June shrank 21 percent.

So the Japanese automaker fell short of some analysts' predictions that it would overtake GM as the U.S. sales leader. June sales at GM had a still-dramatic drop of about 18 percent.

The overall market fell 18.3 percent, according to Autodata Corp. It was the worst June for the industry in 17 years, said Jesse Toprak, chief industry analyst for auto information site www.Edmunds.com, who predicted more misery ahead.

Toprak said automakers simply did not react quickly enough to the staggering rise of gas prices.

"I think the gas price rise that we've seen from March through June was so fast and so dramatic that even Toyota, which is known to really forecast consumer demand, was caught off guard," he said.

The shrinking market continued its shift toward more fuel-efficient models. Some automakers were caught with too few of the smaller cars.

That includes Toyota Motor Corp., which didn't have enough of its fuel-efficient Prius, Corolla or Yaris cars at dealerships to keep up with demand. Prius sales were hurt by a battery shortage, while sales of the Corolla and Yaris suffered because of plant capacity.

When consumer tastes change as quickly as they have this year, it's tough for automakers to react in a matter of months. Additional workers have to be brought in to factories and trained to build different cars.

Ford has been trying to raise output of the lone factory near Detroit that makes the Focus compact, but still couldn't meet demand this month. Both GM and Ford have announced plans for new subcompacts, but it will take at least two years to gear up factories for the new products.

"That just shows the market forces changed extremely fast. No automaker was ready for it," he said.

Only Honda Motor Co., whose lineup is tilted toward smaller and more fuel-efficient cars, reported a sales increase for June — slightly more than 1 percent. Honda car sales were up nearly 20 percent, while truck sales were down 24 percent.

Elsewhere, the picture was far worse. Nissan Motor Co. reported sales off nearly 18 percent. Sales at Ford Motor Co., which still relies on trucks and sport utility vehicles, plunged almost 28 percent. And Chrysler LLC plunged nearly 36 percent.

To help boost sales, Chrysler said, it would extend its offer of $2.99 per gallon gas through July 31. It had been scheduled to expire July 7. Chrysler pays the difference between $2.99 and the pump price for 12,000 miles a year under the offer.

The promotion started in May, but car sales at Chrysler still fell by almost half. Its truck sales dropped 30 percent.

The overall market dropped to about 1.2 million vehicles sold, down more than 266,000 from last June. U.S. car sales were down about 10 percent for the first half of this year.

Ford sold 41 percent fewer of its perennial best-seller, the F-series pickup truck, and it sold fewer than half the number of Explorer SUVs as it did in June 2007.