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Sales challenges ahead: NADA

November 22, 2010
April's new-vehicle sales reports should continue March's gains, as the weather improves and more consumers visit new car dealerships. For GM and Ford, said NADA chief economist Paul Taylor, one more ingredient needs to be maintained through the spring: more competitive pricing. Such pricing for GM appeared in the last half of March, but too late to dramatically turn the month's sales tide.
For the first two months of the year, light vehicle sales were down 9.9 percent for GM and 7.2 percent for Ford versus last year. This year, with persistent news about rising gasoline prices, light truck sales are down 3.8 percent for Toyota, 7.9 percent for GM and 12.1 percent for Ford.
Toyota is making relative progress, but is challenged by an overall drop in sales. For truck-based SUVs, made in North America, sales are down 19.5 percent, while SUVs imported from outside North America are down 10.3 percent.
Taylor said pricing disparities and constantly changing incentive plans, which in some cases haven't been well communicated, are largely responsible for the spread in the declines. All of the truck-based SUVs with similar V8 or V6 engines obtain about the same gasoline mileage.
Sales are up for the carbased Crossover Utility Vehicles, or CUVs, which get better mileage. Sales increased 20.7 percent for CUVs made in North America and 6.6 percent for those manufactured abroad.
This segment of CUVs has been growing at double digit rates since 1999. Toyota Division and Ford Division got an earlier start and have more offerings in this key area of growth than GM's Chevrolet and Pontiac Divisions.
Except for the lack of CUV products, these are solvable problems for GM in the nine months left in the year. Overall, product is much less of a problem than many GM critics have suggested.
In the first two months of the year, Chevrolet has the second-best-selling sedan (Malibu), and the fifth-best seller (Impala), while Ford's Taurus (7th), Focus (9th) and new Mustang (10th) are doing well. The Mustang and Pontiac G6 demonstrate that style still helps sales. The Big 3 are seeing some bright spots in car sales.
There is plenty of time left in 2005, but all of the major manufacturers will be busy to sell more light vehicles in the months ahead.