GM, Ford shares fall as sales concerns rise

Reuters
June 23, 2008

Shares of General Motors Corp. tumbled to their lowest level in 33 years Monday while rival Ford Motor Co. fell to a three-month low on concerns about weak U.S. auto demand in June and the rest of the year.

Auto analysts painted a grim picture for the sector, which has been hurt by a collapse in demand for pickup trucks and SUVs amid record high gasoline prices.

Citigroup expects June sales to fall to under 13 million units on an annualized basis, compared with 16.3 million in the same month last year.

"Detroit Three [automakers'] retail sales remain much weaker than the overall industry," Citigroup analyst Itay Michaeli said on Monday in a note.

Lehman Brothers analyst Brian Johnson estimated June sales in the mid-12 million range.

"The auto downturn appears to be entering a problematic second phase," he said. "In this phase, with gas prices remaining stubbornly high, demand for both new and used large pickups, and large/mid SUVS is falling precipitously."

Also, the falling trade-in values for larger vehicles were keeping buyers out of the market, he added.

Ford's decision on Friday to cut truck production and delay the launch of its redesigned top-selling F-150 pickup truck underscored the pressure faced by automakers.

GM and Ford have lowered expectations for U.S. auto sales this year. Ford now expects 2008 auto sales, including medium and heavy vehicles, to come in as low as 14.7 million.

U.S. light vehicle sales for 2007 were near 16.15 million units and most industry analysts had expected only a slight decline this year.

But investor concerns over the U.S. auto market have been heightened after sales of trucks on an industrywide basis dropped sharply this year.

Automakers are scheduled to report June sales on July 1.

GM shares fell as low as $12.78 on Monday before trading down 61 cents, or 4.42 percent, at $13.18 on the New York Stock Exchange at mid-afternoon. The stock has lost about a third of its value since the start of the year.

Ford dropped to an intraday low of $5.30, before paring losses to 35 cents, or 6.02 percent, at $5.46 on the NYSE.

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