April auto sales slump, truck sales plunge

By David Bailey Thu May 1, 2:51 PM ET

DETROIT (Reuters) - U.S. auto sales fell sharply in April with rising gasoline prices weighing hardest on sales of large sport utility vehicles and pickups, where the industry traditionally has made its biggest profits.

General Motors Corp posted a 23 percent decline in sales, at the low end of analyst expectations. Sales for Ford Motor Co dropped 19 percent, which was weaker than expected.

The two leading U.S. automakers said preliminary data suggested industry-wide sales had fallen below 15 million units on an annualized basis, which would mark the weakest result in more than a decade and a half.

While the U.S. automakers continued to struggle, their Asian competitors also struggled through a dreary April.

Toyota Motor Corp saw sales fall almost 5 percent on sharp drops in SUVs and pickup trucks, like the FJ Cruiser and the Tundra, more than offsetting gains for small cars like the Yaris and the Prius hybrid.

In the United States -- the world's largest auto market -- April marked the fifth consecutive month of sales declines for Toyota, now the world's top automaker by global sales volume.

Auto sales represent one of the first monthly snapshots of U.S. consumer demand and investors have looked to the reports for evidence of whether the U.S. economy has slipped further toward recession since the start of the year.

Ford said it expected industry-wide sales would fall to the mid-14-million-unit range on an annualized basis in April, below the industry's pace of 15.2 million sales on the same basis in the first quarter and below most full-year forecasts.

Honda Motor Co Ltd, Nissan Motor Co Ltd and Chrysler LLC are due to report sales results later on Thursday.

Sales results for the major automakers were adjusted for two additional selling days in April compared with the same month a year earlier.

NEW DAY; HIGHER GAS

Regular unleaded gasoline reached a national average record price above $3.62 per gallon on Thursday, according to AAA.

The market shift toward cars is a trend that has favored Japanese car makers with more established small car offerings such as Toyota and Honda. Conversely, that same trend has pummeled the truck-heavy lineups of Detroit-based automakers.

"Smaller vehicles are going over big," Toyota U.S. sales chief Jim Lentz said. "With oil prices at record levels, compact cars and hybrids continue to lead the way."

Automakers have held out hope that U.S. government stimulus plans and interest rate cuts by the Federal Reserve would support auto sales in the second half of the year.

Ford and GM in late April both cut their expectations for U.S. auto industry sales for 2008.

Ford now expects U.S. sales to range from 15 million to 15.3 million, excluding roughly 300,000 heavy trucks. The second quarter could be worse than the first, and possibly the worst of 2008.

GM, which reported a $3.25 billion first-quarter net loss on Wednesday, cut its forecast to the mid to high 15-million-unit range for 2008 U.S. auto sales, which include both light vehicles and heavier work trucks and buses.

GM said it still expects a second-half recovery for auto sales, but probably less robust than it thought at the start of 2008. The automaker also is fighting through a strike at American Axle & Manufacturing Holdings Inc that has cut deeply into production of SUVs and trucks.

Overall, automakers increased their sales incentives in the United States by 1.9 percent in April from a year earlier to an average of $2,449 per vehicle, according to Edmunds. That figure is heavily weighted toward large trucks.

Year-over-year, Chrysler and Nissan incentives declined, Ford's rose slightly, and GM, Honda and Toyota incentives rose, according to Edmunds.

(Additional reporting by Kevin Krolicki and Soyoung Kim; Editing by Braden Reddall)