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As Fleet Sales Stall, Automakers Report Mixed Results

August 1, 2012
4 min to read


DETROIT — Auto sales in the United States cooled off in July as the two biggest American carmakers, General Motors and the Ford Motor Company, reported declines that they attributed partly to lower sales to rental car fleets.


The drop in sales at G.M. and Ford were offset by strong performances at Toyota and Honda, which a year ago were struggling to overcome inventory shortages because of the earthquake and tsunami in Japan.

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Over all, the industry reported sales on Wednesday of 1.15 million vehicles during July, which was an 8.9 percent improvement over the same period a year ago, according to The New York Times.


That lags the 14.8 percent increase the industry recorded during the first six months of 2012. While sales are still on track to top 14 million vehicles for the entire year, analysts said growth appeared to be slowing somewhat.


“The good news is that demand is stable and it is not fueled by incentives and discounts,” said Jesse Toprak, chief market analyst for the auto research Web site TrueCar.com. “On the other hand, we’re not seeing that blockbuster month.”


Industry incentives remained flat in July compared with the previous month, with an average discount per vehicle of about $2,200, according to Edmunds.com, an auto information site that compiles incentive data.


Most automakers said that truck sales slipped during July and car sales increased. Executives noted that consumers continued to be heavily influenced by the fuel economy of vehicles they purchase.

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G.M., which will report quarterly earnings on Thursday, turned in the worst performance of any major automaker, selling 201,000 vehicles during the month, down 6.4 percent from a year ago.


Sales of the Chevrolet Cruze, a hot subcompact last July, plunged amid a surge of interest in the Honda Civic.


G.M. said its sales to retail customers rose slightly, but sales to rental car fleets fell 41 percent.


G.M. executives said that rental car deliveries dropped because more cars had been ordered earlier in the year. But the company is not expecting the falloff to be repeated.


“This was a one-month issue,” said Alan Batey, who took over this week as G.M.’s interim head of global marketing.

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Mr. Batey replaced Joel Ewanick, who resigned this week after the company said he had failed to meet its standards in negotiating a sponsorship deal with an English soccer club. Mr. Ewanick’s departure raised questions about how G.M. might alter its marketing strategy to recoup lost market share.


“Fleet sales are part of the reason for G.M.’s lackluster results in July, but not the only reason,” Mr. Toprak said. “Some of their biggest sellers have lost momentum in the marketplace.”


However, Mr. Batey said G.M. would not change its marketing plans, including a recently introduced program that allows Chevrolet buyers to return new vehicles if they are not satisfied. “There is no change in direction,” he said. “It’s all about execution.”


Ford said its United States sales declined by 3.8 percent during the month to 173,000 vehicles. The company also cited soft rental car fleet sales as a prime reason for the drop.


Sales of Ford pickups fell 9 percent during the month, but the company enjoyed healthy sales of small cars and the new version of its Explorer S.U.V. “Fuel economy continues to be a top consumer purchase driver across our lineup,” said Ken Czubay, head of Ford’s United States sales and marketing.

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Other automakers were not as affected by cutbacks in rental car orders. Chrysler, the smallest of the Detroit automakers, said its sales in July increased 12.6 percent to 126,000 vehicles, as consumers continued to buy popular models like the Jeep Grand Cherokee and Chrysler 200 sedan.


“July was another solid month for Chrysler as we again demonstrated our disciplined and methodical approach to growing sales and profits,” said Reid Bigland, head of United States sales for Chrysler.


The big foreign automakers continued to gain market share with new models and improved inventory levels.


Toyota said its American sales climbed 26.1 percent during the month to 164,000 vehicles, and Honda reported a 45.3 percent increase to 116,000 vehicles. A year ago, both companies were hard-pressed to fill showrooms because of manufacturing and supplier problems in Japan.


The German carmaker Volkswagen reported a 27.5 percent increase in sales for its VW and Audi brands combined. The company is increasing production at its new plant in Tennessee to keep up with demand for popular products like the Passat sedan.

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The auto companies generally agreed that sales would increase slightly this fall, particularly in pickup trucks.


“Signs of a housing recovery and good news on consumer confidence and household income should keep the light vehicle selling rate in the 14 million range and drive seasonally higher truck sales as we move toward fall,” said Kurt McNeil, a senior United States sales executive at G.M.

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