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What’s in store for Detroit's Big 3?

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General Motors Co (GM-N) and Ford Motor Co (F-N) reported strong U.S. sales gains in April, as high gasoline prices drove consumer demand for fuel-efficient cars.
   
Auto sales are an early indicator each month of U.S. consumer demand, and GM and Ford, as the top two U.S. automakers, indicated that industry sales will be strong.
   
A Thomson Reuters poll of 40 economists and analysts had predicted an industry gain of 16 percent over last year.
    
GM showed overall sales up 26 percent in April, and Ford gained 16 percent from a year ago.
    
Retail sales, which do not include the bulk fleet totals, were up 25 percent for GM and 10 percent for Ford.
   
GM said it gained on Ford in retail sales even as it decreased consumer sales incentives by about $400 US per vehicle in April from March.
   
GM said that its retail sales were up 25 percent, driven by higher sales for its fuel-efficient Chevrolet compact cars and compact crossovers: the Cruze, Equinox and Terrain.
   
The Cruze, the compact car that GM introduced last year, is now the second-biggest selling vehicle in the automaker's lineup, behind only its Silverado pickup truck. Cruze sales so far this year are about triple the sales of the car it replaced, the compact Cobalt.
   
"Consumers are continuing to rethink their vehicle choice," said Don Johnson, GM vice president for U.S. sales.
   
Ford sales analyst George Pipas said this week that Ford is also showing a major shift in consumer taste toward smaller and more fuel-efficient cars as gasoline prices rise.
   
U.S. retail gasoline prices rose 8 cents in the past week to $3.96 per gallon and are now $1.07 higher than a year ago, according to government figures released on Monday.
   
Pipas said the he believes that high gasoline prices are convincing many consumers to "pull the trigger" on a new vehicle purchase.
   
"I believe there is a call to action," Pipas said of consumer purchases this spring. "Summer is the driving season, and I'm going to pull the trigger," he said of consumers.
   
JAPAN QUAKE IMPACT
   
On Monday in Japan, new-vehicle sales in April halved, sinking to the lowest monthly tally on record, as Japanese automakers felt the full brunt of the March earthquake.
   
Also Monday, French car sales fell 1.2 percent, reflecting the end of a scrappage scheme. In Italy, they fell to the lowest level in 15 years.
   
Howard Wheeldon, analyst with BGC Partners in London, said that Japanese automaker sales globally this year will suffer their worst percentage decline since the mid-1970s.
   
The Japanese automakers are not expected to return to normal production levels until the end of the year.
   
Toyota and Honda models have dominated the compact car segment of the U.S. auto industry since the 1980s.
   
As the number of fuel-efficient cars from Japan declines, U.S. brands from GM and Ford are seen as the most likely to gain, analysts said. Chrysler is still developing its small-car lineup.
   
This was to be the year that Toyota overcame the negative publicity of its more than 17 million worldwide safety recalls—most in the United States—starting in late 2009.
   
But the earthquake in Japan has dashed that hope as Edmunds.com expects Toyota's April sales to rise only 2.4 percent from last year, when it relied on incentives to lure consumers back to showrooms.
   
In March, Ford outsold GM for only the second time in 13 years, but GM outsold Ford by 18 percent in April.

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