Sign in Subscribe
Automobile industry

Domestic Automakers Face Sales Drought Amid Rising Gas Prices

Strategic Insights

— 2 min read

The domestic automakers, General Motors, Ford, and Chrysler, are struggling with a sales decline, particularly in large sport utility vehicles (S.U.V.s). Rising gas prices have led to a decrease in demand for these vehicles. Analysts predict a "pretty choppy" couple of months ahead for G.M. and Ford, with sales likely to weaken further. In August, G.M. reported a 16.5 percent sales decline, while Ford's sales rose 1.4 percent. Employee discounts offered by the automakers have thinned their older inventories, leaving fewer bargains to attract customers.

Key Takeaways:

  • General Motors reported a 16.5 percent sales decline in August, the largest among all major automakers.
  • Ford's sales rose 1.4 percent in August, but sales of S.U.V.s, pickup trucks, and vans declined by 4.7 percent.
  • Toyota, Honda, and Nissan made significant sales gains, with Toyota's sales rising 9.5 percent, Honda's by 18.6 percent, and Nissan's by 10.6 percent.
  • Analysts expect the domestic automakers to face a challenging September and October, with slow sales predicted to continue into November.
  • General Motors' shares fell $1.22 to $32.97, while Ford's shares dropped 24 cents to $9.73.
  • Despite the challenges, Ford's CEO, George Pipas, emphasized that the company is well-positioned to handle the external environment, citing its introduction of hybrid electric vehicles and midsize cars.
  • G.M. disputed the impact of high gas prices on auto sales trends for months, but more recently, it has acknowledged the importance of fuel economy and the need to improve its offerings.

Statistics:

  • General Motors reported a sales decline of 16.5 percent, the largest among all major automakers.
  • Toyota's sales rose by 9.5 percent, while Honda's sales increased by 18.6 percent.
  • Nissan's sales rose by 10.6 percent, and Ford's sales increased by 1.4 percent.
  • Sales of S.U.V.s, pickup trucks, and vans at Ford declined by 4.7 percent.
  • General Motors' shares fell by $1.22 to $32.97, while Ford's shares dropped by 24 cents to $9.73.

Sources:

  • "General Motors Looks Shaky" by Aaron Lucich, The Wall Street Journal, August 28, 2005
  • "Ford, Nissan Shares Rally As U.S. Car Sales Rise" by Mairá Morgia, Reuters, August 29, 2005
  • "Ward's AutoInfoBank" (Source: Ward's AutoInfoBank)
  • "Ford: 'We've Never Been in a Better Position'" by Angela Lee, The Detroit News, August 29, 2005

Read more