After an awful April, nearly every industry forecaster now agrees: U.S. sales will plummet by about 1 million units in 2008 — the first time sales have tumbled that much in one year since 1991.
But it's not just the million units that matters. It's the mix.
High-profit pickups and SUVs account for most of the lost volume. Big trucks have been in a tailspin for months, but with record high fuel prices, the rate of decline has hit warp speed.
The full-sized pickup segment is tracking at about 1.9 million units, down from 2.5 million three years ago, said Toyota Division boss Bob Carter. Last week, General Motors cut full-sized truck production in North America by 138,000 units for the remainder of the year, including 88,000 full-size pickups. At several dealerships in California, you can get a $13,000 discount on a Dodge Ram.
Cash rebates industrywide had been falling for three years, but they rose sharply in April — returning to 2005 levels, according to Power Information Network.
General Motors, Ford Motor Co. and Toyota have pared forecasts for U.S. light-vehicle sales to the low 15 million range. But it's a changed industry — not just smaller, but poorer.
“We're in a lot of whitewater in the industry right now,” said Mark Fields, Ford's president of the Americas.
The most alarming news in GM's big earnings decline, announced last week: a $3.6 billion drop in North American automotive revenue. Even Ford Motor's surprise $100 million first-quarter profit masked a $1.4 billion falloff in North American automotive revenue.
“The challenge for the industry is from a revenue standpoint,” said Mark LaNeve, GM's vice president of vehicle sales, service and marketing. “Revenue has disappeared from the truck market declines, higher commodity prices, meeting CAFE and other regulations. So prices are going to have to come up over time, and I believe we're already seeing it. We're seeing similar moves from our competition.”
April sales declined 6.8 percent. And for the first time in four years, the industry's average retail transaction price ($27,238 through April 27) declined compared with the same month a year earlier.