Automakers will begin reporting June sales figures today, and analysts expect the results to be even bleaker than the bad news the industry has been sharing throughout the first half of 2008. Stock prices are tumbling, and several major automakers are facing threats to their futures.
Reuters reports, "U.S. auto sales in June are expected to post a double-digit decline, dropping to a 15-year low as record gasoline prices killed the market for trucks and SUVs and made it impossible for many drivers to swap out for more fuel-efficient, new cars. … Now the urgent question for investors has become whether the world's largest car market has hit bottom or whether an even deeper downturn awaits over the remainder of the year due to $4 per gallon gasoline and tighter credit."
The grim numbers have led to a sharp drop in the value of the major automakers. The AP explains, "Shares of General Motors Corp. dropped to their lowest level in more than half a century, and Ford Motor Co. stock tumbled to a new low yesterday." For GM, shares have fallen "below the previous 52-week low of $11.21, which was also their lowest level in more than 53 years." GM shares have been worth as much as $43.20 in the past year.
Japanese automakers post their sales figures first. Bloomberg reports from Japan this morning, "Mazda Motor Corp., a third owned by Ford Motor Co., led a drop in domestic auto sales in June, as rising costs for gasoline and food lowered demand for new cars." Toyota and Honda have actually seen a slight increase in sales, "helped by new model introductions this year." But their results weren't enough to buoy the rest of the Japanese auto industry, which saw an overall sales drop of about 1.2 percent.
A Bloomberg survey of analysts predicts Chrysler sales will drop by about 25 percent, GM by 21 percent and Ford by 19 percent. The few consumers who did buy new vehicles in June "were drawn to cars and 'crossover' wagons that blend car and truck features. On June 1, the industry had the lowest supply of cars for that date in at least 17 years, according to trade publication Automotive News. Inventories of compact cars and hybrids are 'going down at a rate we've never really seen before, and automakers are caught a bit unprepared,' Jesse Toprak, an Edmunds.com analyst in Santa Monica, California, said in an interview. 'It might take several years to fully meet the consumers' demands.'"
The Calgary Herald reports that Chrysler suffered "an operating loss of about $300 million in the first four months of the year," less than the $700 million the company had projected. Still, "speculation in European markets forced Chrysler to say it wasn't considering bankruptcy" late last week.
Rumors of impending bankruptcy have begun to trouble General Motors as well. June's dismal sales figures won't help.
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