Asian automakers outsell Big 3; GM shuts truck plants, halts Hummer production

Wednesday, June 4, 2008 at 2:06am
GM announced it will close its four truck plants by the end of 2010. Bloomberg News

Asian automakers outsold Detroit’s Big Three in the U.S. for the first time last month as fuel-conscious consumers shunned General Motors Corp. and Ford Motor Co. trucks for Honda Civics and Toyota Corollas.

“I've never known the market to change this much this quickly in my lifetime,” said Jim Hossack, a market analyst for AutoPacific Inc. in Tustin, Calif., and former engineer for Ford, Chrysler and Mazda Motor Corp. “It's fueled by gasoline prices, obviously, but there’s more to it than that.”

Yesterday, GM announced it will close its four North American truck plants by the end of 2010, possibly earlier if sales worsen, and also said it may drop its Hummer unit, as surging gasoline prices turn buyers away from the hulking sport-utility vehicles that generated profit for the automaker and criticism from environmentalists.

Hummer vehicles may be redesigned, or all or part of the division may be sold, GM said today. The company didn't say when it would make a decision.

The announcement adds to evidence of an end to the days of booming sales of fuel-thirsty SUVs as gasoline approaches $4 a gallon. U.S. sales for SUVs are down 10 percent this year, after rising 3.7 percent in 2007, spurring Detroit-based GM and Ford Motor Co. to pare production of what had been some of their most profitable lines of vehicles.

“With the gas prices where they are and the stigma of having such a large vehicle, I think most U.S. consumers would feel they are better off not having a Hummer,” said Jesse Toprak, an analyst with in Santa Monica, California. “Unless GM can make a much smaller version of the Hummer, I don't think it can be much more than a niche vehicle here.”

Hummer’s H3 gets 14 miles per gallon in city driving, the same as a Chevrolet Tahoe SUV. By comparison, Toyota Motor Corp.’s Prius gets 48 mpg in city driving.

Toyota’s Prius also is available as a gas-electric hybrid, and yesterday GM said that two of the closed truck plants could reopen to produce a version of its Chevrolet Volt electric vehicle or the company could expand car output at two plants.

Ford said Tuesday it will boost production at an Ontario plant by about 19 percent next year by adding a third shift to build more Flex, Edge and Lincoln MKX crossovers.

The switch to more fuel-efficient cars won’t be enough to stem further reductions in spending on autos this year, according to economists. Industry sales in the world’s largest auto market may fall to 14.7 million this year, the lowest in 15 years, Ford said last month.

But in May, Japanese and South Korean companies boosted sales by a combined 3.7 percent. GM, Ford and Chrysler LLC as a group fell 21 percent as gasoline near $4 a gallon drove U.S. consumers from pickups and sport-utility vehicles.

Honda Motor Co.’s Civic small car dethroned Ford’s F-Series pickup to become the best-selling vehicle in the U.S. The last time the pickup was topped by a car was in December 1992, according to Ford, and that car was the Ford Taurus.

Overall, GM dropped 28 percent and Ford reported a 16 percent decline. The two companies rely on pickups and SUVs for more than 60 percent of their combined U.S. sales. Honda —which doesn't offer V-8 engines or full-sized SUVS and pickups — advanced 16 percent.

Honda also outsold Chrysler to rank No. 4 in U.S. sales, behind GM, Toyota and Ford. Chrysler, the U.S. automaker most dependent on light trucks, fell 25 percent for its steepest drop this year.

Japan's Suzuki Motor Corp., which specializes in small cars, advanced 1.7 percent, and Nissan Motor Co. climbed 8.4 percent. South Korea’s Hyundai Motor Co. and Kia Motors Corp. each gained more than 5 percent.

Some of Detroit’s cars advanced. Ford’s Focus small car gained 53 percent in May, and the Fusion mid-sized sedan was up 27 percent.

All told, Asia’s 10 automakers sold 671,398 cars in the U.S. last month, 32,290 more than Detroit's Big Three.

The declines at GM, Ford, Toyota and Chrysler come amid signs of a weakening U.S. economy. Manufacturing in the U.S. contracted for a fourth straight month in May, according to a report yesterday from the Institute for Supply Management. The Reuters/University of Michigan index of consumer sentiment fell to the lowest since June 1980 in May after the U.S. lost jobs in the first four months of the year.

“An increasingly constrained consumer, deepening woes for the housing sector, and a degree of unwanted inventory accumulation in the first quarter will all weigh on manufacturing output,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., said in a note to clients.

The average price of a gallon of gasoline rose to $3.98 in the U.S. yesterday, up from $3.16 a year earlier, according to motorist group AAA.

The doubling of gasoline prices over the past three years represents “a structural change, not just a cyclical change,” said GM Chief Executive Officer Rick Wagoner on Tuesday.

When GM acquired rights to the Hummer brand from privately held A.M. General LLC in late 1999 for an undisclosed sum, industry SUV sales were regularly rising more than 14 percent annually and gasoline prices were less than a third of today’s prices.

Hummer sales peaked in 2006 at 71,524 units, before dropping 22 percent last year, according to Autodata Corp. Sales of the SUVs, which start at about $31,000 for the smaller H3 model, fell 36 percent this year in the first five months and were down 60 percent in May alone, according to a GM statement yesterday.

In its first two years under GM, Hummer sold only the $140,000 H1, the five-ton SUV patterned after an all-terrain military vehicle and popularized by actor Arnold Schwarzenegger.

The H1 and its successor, the smaller H2, both were too heavy to come under U.S. fuel-economy standards, GM spokesman Nick Richards said in an interview.

As governor of California, Schwarzenegger later began driving a Hummer that ran on hydrogen and another using biofuel as he focused his agenda on environmental measures.

The automaker drew fire when it began marketing model Hummers as free toy giveaways in McDonald's Corp. children’s meals in 2006. Groups including the Sierra Club said the promotion failed to teach children environmental responsibility.

Owners such as Vijay Verma, a member of the Carolina Hummer Owners Group and an H1 owner, said they were disappointed by GM's announcement.

“GM has lost the primary focus of the Hummer vehicles, which was to provide effective recreational use,” he said in an interview. “Yes, you have fuel consumption issues, but there are a lot more vehicles that do more against the environment.”

Hummer sales jumped from 768 in 2001 to 19,581 in 2002 after the introduction of the H2, which was about 2,000 pounds lighter than the H1.

The H2 measures about 204 inches (518 centimeters) in length, compared with 222 inches for a Chevrolet Suburban SUV, though the Hummer is 1,400 pounds heavier.

— Bloomberg News

Filed under: City Business
By: idgaf on 12/31/69 at 6:00

GM and other American auto makers are always playing catch up and abandoning markets that the other auto markets are penitrating (like PU trucks)All auto makers should be building more 2 door cars for the boomers that don't have any kids anymore (like the japs are doing)GM should be consintrating on the rave reviewed HHR which gets 30 mpg and come out with a hybred and all electric version.Ford should FINALLY build the mustang station wagon and Chrsler needs to drop the price of their Magnum.American auto makers tend to pay far more attention to the high priced high profit speciality car as in the case of the new Challenger. Put that out as reasonably priced car competing with the mustang and they would sell a ton of them. Why should you have to pay 15K more to get a 2 dr version of their Charger? (which was stupid to build in 4 dr only)

By: gdiafante on 12/31/69 at 6:00

"Mustang station wagon"...LOL!

By: Kosh III on 12/31/69 at 6:00

Yeah, lol mustang station wagon. What else? Bedless pickup?