DETROIT U.S. auto sales plunged in June to a 15-year low, but a month-end clearance sale helped General Motors Corp (GM.N) retain its No. 1 spot and steer clear of the wipeout many had feared, sending its shares higher.
Record gas prices and declining trade-in values for big trucks and SUVs hit truck sales hard while major automakers, including Toyota Motor Corp (7203.T), struggled to keep up with demand for some popular smaller cars and hybrids.
GM was the industry's main surprise after a sale featuring zero percent financing for six years allowed the U.S. automaker to avoid losing sales leadership in the month to Toyota.
In a reversal of recent trends, Toyota trailed GM in June with a 21-percent sales decline, reflecting a 31-percent drop in sales of its trucks like the Tundra pickup.
Equally damaging, sales of Toyota's hybrids including the market-leading Prius hybrid dropped 27 percent as dealer inventory ran short of demand.
The Japanese auto maker sees U.S. vehicle sales hitting bottom this year, with a modest recovery in 2009, and a substantial rebound in U.S. auto sales in 2010 and beyond.
"GM was better than expected, and it looks like Toyota missed a big opportunity in the month," said Jesse Toprak, an analyst with industry-tracking Web site Edmunds.com.
Ford Motor Co (F.N) sales were down 28 percent, while Chrysler LLC sales fell 36 percent, the weakest result in the industry. Now controlled by Cerberus Capital Management CBS.UL, the privately held automaker relies on light trucks for almost 70 percent of its sales.
By contrast, Honda Motor Co (7267.T), which boasts the most fuel-efficient vehicle line-up among major automakers, bucked the downturn and posted a 1 percent sales gain.
Sales for Nissan Motor Co (7201.T) dropped 18 percent.
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The sales rate for light vehicles dropped to 13.6 million units on an annualized and seasonally adjusted basis, down from 15.7 million a year earlier, according to tracking firm Autodata Corp. It was the weakest month since August 1993.
Most analysts and major automakers now expect full-year U.S. sales to end up near 15 million units, down from 16.15 million in 2007 because of the devastated U.S. housing market, high gas prices and weak consumer confidence.
GM SALES IN SPOTLIGHT
On the adjusted basis tracked by Wall Street analysts and investors, GM's sales were down 8 percent. Analysts, on average, had expected a decline of more than 15 percent, according to a compilation of forecasts.
June had three fewer sales days than the same month a year earlier, leading to a difference of about 10 percentage points between adjusted and non-adjusted figures.
GM shares, which touched a 54-year-low on Monday and have been trending lower for two months, rose as much as 15 percent on the June sales figures, pulling the broader U.S. equity market higher.
The stock, which has lost half its value since the end of April, finished up 2.17 percent at $11.75.
Analysts said GM's more modest sales decline in June showed that its incentive program had succeeded. GM has avoided such a strategy in recent years because it cuts into profit margins and can rob sales from future months.
GM sales chief Mark LaNeve said the month-end June promotion had cost the automaker an additional $400 on the average vehicle.
"It was six days long and really helped build dealer and customer momentum," LaNeve said.
An urgent question for creditors and investors has been whether the cash-strapped U.S. auto industry is headed for even weaker sales in the second half of the year.
George Magliano, an analyst with Global Insight, said he sees no sign that the United States, largest market in the world for cars and light trucks, had hit bottom in June.
He said that although overall sales had topped the most bearish expectations, "they are still disappointing and disconcerting."
"The bottom line is the selling rate in June is weaker than May, and May was not a good month," he said.
Magliano, who expects U.S. auto sales to be 14.4 million units this year, cut his forecast for next year to 14.2 million units.
Ford's marketing chief Jim Farley pointed out that consumer fundamentals and confidence had deteriorated in the first half of the year and added, "The economy enters the second half of the year with a notable absence of momentum and a high degree of uncertainty."