DETROIT (Reuters) - U.S. auto sales fell to their lowest annual rate in more than 15 years in April as weak consumer confidence and rising gas prices hit the industry’s most profitable vehicles hardest.
Sales at Detroit’s Big 3 of General Motors Corp (GM.N), Ford Motor Co (F.N) and Chrysler LLC CBS.UL -- with their truck-heavy lineups -- were worse than expected, according to data released on Thursday. GM sales fell 23 percent, Ford 19 percent, and Chrysler nearly 30 percent.
“No one is immune to the weakness,” said Jesse Toprak, analyst at Edmunds.com, an auto industry tracking firm.
Auto sales represent one of the first monthly snapshots of U.S. consumer demand, and investors have looked to the reports for evidence of whether the U.S. economy has slipped further toward recession since the start of the year.
The leading automakers said preliminary data suggested industrywide sales fell to about 14.7 million units on an annualized basis in April, which would mark the weakest result since the early 1990s.
Of equal concern to automakers, buyers defected from high-margin trucks and SUVs to cheaper and more fuel-efficient cars more rapidly than expected due to the high gas prices. The trend threatened to crimp profits due to reduced sales volume.
Toyota, which reported a fifth consecutive month of sales declines, experienced a sharp drop for SUVs and pickup trucks, like the FJ Cruiser and the Tundra, which more than offset gains for small cars like the Yaris and the Prius hybrid.
‘PERIOD OF WEAKNESS’
“We’re into the second quarter, and it’s clear that the U.S. economy continues to move through a period of weakness,” said Bob Carter, head of the Toyota division in the United States.
In recent weeks, all major automakers have scaled back expectations for 2008 U.S. auto industry sales.
Toyota expects sales in the low 15-million unit range for 2008, down from 16.1 million a year earlier, and its own forecast for an almost-flat year.
First-quarter sales fell to a 15.2 million annual rate, and both Ford and GM said they expected the current quarter to mark the trough of the downturn.
Sales results for the major automakers were adjusted for two additional selling days in April compared with the same month a year earlier.
Regular unleaded gasoline reached a record national average price above $3.62 per gallon on Thursday, according to AAA.
The market shift toward cars is a trend that has favored Japanese carmakers with more established small car offerings such as Toyota and Honda. The trend has pummeled the truck-heavy lineups of Detroit-based automakers.
Automakers have held out hope that U.S. government stimulus plans and interest rate cuts by the Federal Reserve would support auto sales in the second half of the year.
GM still expects a second-half recovery for auto sales, but probably less robust than it thought at the start of 2008. The automaker also is fighting through a strike at parts maker American Axle & Manufacturing Holdings Inc (AXL.N) that has cut deeply into production of SUVs and trucks.
Overall, automakers increased their sales incentives in the United States by 1.9 percent in April from a year earlier to an average of $2,449 per vehicle, according to Edmunds. That figure is heavily weighted toward large trucks.
Year-over-year, incentives at Chrysler and Nissan declined, Ford’s rose slightly, and GM, Honda and Toyota were up, according to Edmunds.
Additional reporting by Kevin Krolicki and Soyoung Kim; Editing by Braden Reddall/Jeffrey Benkoe