With gas prices high, shoppers are shunning SUVs for smaller cars

Thursday, June 2, 2005

DETROIT - The U.S. automotive scene changed little in May: General Motors Corp. and Ford Motor Co. again reported decreased demand for their vehicles, particularly trucks and SUVs, while Chrysler Group and Asian brands generally posted positive results.

To make matters worse for GM and Ford - and their suppliers - both automakers said Wednesday they plan to cut third-quarter production because of sluggish business. The cuts are sure to hurt the companies' bottom lines.

George Pipas, Ford's top sales analyst, said May was a weak month for the industry, especially compared with last year. The seasonally adjusted annual sales rate for May was 16.6 million vehicles, down from 17.7 million last May. The rate indicates what sales would be for the full year if they remained at the same pace for all 12 months. Full-year sales for 2004 were about 17 million.

"The consumer appears to have taken a little pause," Pipas said. "The Memorial Day weekend was pretty strong, but it didn't outdo the month-end reporting of a year ago."

GM and Ford, the nation's two biggest automakers, saw sales slip again in May as customers continued to turn away from their sport utility vehicles and trucks in favor of models from Asian competitors. The traditional Big Three automakers saw truck sales slip 4.4 percent in May, while Asian automakers saw comparable sales rise 6.9 percent.

GM's car sales fell 1.6 percent and truck sales slid 7.8 percent for the month compared with May 2004. At Ford, new vehicle demand fell for the 12th straight month. Truck sales were down 6.4 percent.

There were some bright spots for domestic automakers.

DaimlerChrysler AG's Chrysler Group said car sales rose 13 percent and truck sales were up 3 percent for the month. The Chrysler 300 sedan and the Chrysler Town and Country minivan helped the Chrysler brand set an all-time monthly sales record, the company said.

The news for Asian automakers was generally good, though results were lower than the double-digit increases some companies saw in April. Toyota Motor Corp.'s sales rose 7.8 percent last month, dragged down a bit by flat truck sales.

Korean automaker Hyundai Motor Co.'s truck sales are up 23 percent for the year thanks to its new Tucson SUV, and overall sales gained 8.5 percent for the month .

Nissan Motor Co.'s sales jumped 15.5 percent in May and are up 15.8 percent for the year.

Honda Motor Co. saw a 19 percent decline in its aging car lineup. But its trucks, including the new Honda Ridgeline pickup, saw a 14.3 percent increase over last May.

GM, the world's largest automaker, said it plans to cut third-quarter production by more than 100,000 vehicles, or 9 percent. Ford, meanwhile, said it plans to trim third-quarter production by 17,000 vehicles, or 2 percent.

GM shares fell 14 cents to close at $31.39 on the New York Stock Exchange. Ford shares fell 6 cents to close at $9.92 and Chrysler shares gained 30 cents to close at $40.59.