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U.S. automakers' sales plunge

Nissan's board approves exploring an alliance with GM, whose sales dropped 25.7 percent in June.

Compiled from Times Wires reports
Published July 4, 2006

DETROIT - Domestic automakers' sales slid in June, lashed by higher gas prices and by tough comparisons with last summer's discount-driven bonanza, the companies said Monday.

Struggling General Motors Corp. got the worst beating: Its sales plunged 25.7 percent last month.

Rising fuel costs were a boon to Toyota Motor Corp., which credited its fuel-efficient lineup for much of its 14.4 percent sales increase over June 2005. Honda Motor Co.'s U.S. sales were flat.

Sales from a year ago slipped 15.5 percent at DaimlerChrysler AG's Chrysler Group and 6.8 percent at Ford Motor Co., the companies reported Monday.

Across the industry, sales were down 10.5 percent, with truck sales plummeting 19.4 percent and cars inching up 1.6 percent, according to Autodata Corp. The seasonally adjusted sales rate for June, which shows what total sales would be if they remained at the same rate for the entire year, was 16.3-million vehicles. Automakers sold 17-million vehicles in 2005.

Also Monday, Nissan Motor Co., Japan's second-biggest automaker, said its board of directors gave approval to chief executive officer Carlos Ghosn to begin "exploratory" talks with General Motors on a possible alliance.

Billionaire investor Kirk Kerkorian, GM's fourth-largest investor, on Friday called for GM, Nissan and Renault SA to explore a three-way alliance.

Nissan and Renault, both headed by Ghosn, may buy as much as 20 percent of Detroit-based GM, the world's biggest carmaker, according to published reports. Kerkorian, who controls 9.9 percent of GM through Tracinda Corp., is reportedly unhappy with the pace of GM chief executive officer Rick Wagoner's plan to recover from $10.6-billion in 2005 losses.

The Nissan board approved Ghosn proceeding with the talks "if General Motors supports and endorses the proposal made by its shareholders," the Japanese automaker said.

GM, whose shares fell 38 cents to $29.41 Monday, had warned that its June sales would be down significantly because of aggressive discounts last summer.

Paul Ballew, GM's executive director of global market and industry analysis, said comparisons with last year were difficult because of the promotion, which allowed all customers to purchase vehicles at the price given to employees.

"The Employee Discount for Everyone program and the success of that program was probably a once-in-a-decade home run for the industry and certainly for ourselves," Ballew said in a conference call.

He said this June's performance was in line with the company's expectations.

Year-to-date, GM's sales fell 12.2 percent, including a 13 percent drop for trucks and an 11 percent dip for cars.

At Ford, sales of light trucks plummeted 14.6 percent. But the company saw a bright spot in car sales, which rose 8.6 percent, as demand for new mid-sized sedans - the Ford Fusion, Mercury Milan and Lincoln Zephyr - remained high.

For the first half of the year, Ford's sales fell 3.8 percent, with truck sales sliding 9.7 percent and car sales rising 7.8 percent.

Toyota, however, continued to gain ground in trucks, selling 4.8 percent more last month than in June 2005. But its biggest gains were in car sales, which climbed 21.9 percent.

Jim Lentz, executive vice president of Toyota's U.S. division, pointed to a 38.7 percent increase in sales of the Toyota Corolla, one of the most fuel-efficient models, as evidence of the effect of gas prices.

Year-to-date, Toyota's sales rose 9.8 percent, including a 10.4 percent increase in cars and a 9.1 percent increase in trucks.

Honda's car sales crept up 3.8 percent, while truck sales fell 5 percent. The company reported increased demand for small cars, including a 3.9 percent increase in sales of the Civic. Demand for the Fit, a new subcompact, continued to outpace supply, Honda said.

Not all the Japanese manufacturers escaped the pain, however. Nissan saw total vehicle sales drop 19 percent.

Chrysler blamed gas prices for its sales decrease, though its biggest drop was in cars, which fell 32.7 percent, compared with a 10 percent drop in truck sales.

For the first six months of the year, Chrysler sales were down 4.9 percent, including a 6.5 percent drop in car sales and an 8.4 percent drop in trucks.

Last summer, Chrysler matched GM's employee discount program, as did Ford.

But GM and Ford have said they will not take that route this year. Instead, GM is offering zero-percent financing for up to 72 months on many models through July 5, while Ford is offering it for 60 months on many models and 72 for the Expedition large sport utility vehicle.

Information from the Associated Press and Bloomberg News was used in this report.

Top-selling vehicles

These were the top-selling vehicles for June, as well as the number sold and the percent change in sales from June 2005.

Vehicle June 2006 sales Change from June 2005

1. Ford F-Series pickup 65,452 - 9.7 percent

2. Chevrolet Silverado pickup 58,791 - 46.2 percent

3. Toyota Camry 41,427 +9.8 percent

4. Toyota Corolla 37,311 +38.7 percent

5. Honda Accord 32,587 -1.0 percent

6. Dodge Ram pickup 32,375 -1.4 percent

7. Chevrolet Impala 30,716 +85.3 percent

8. Chevrolet Cobalt 26,929 -1.9 percent

9. Honda Civic 26,312 +3.9 percent

10. Dodge Caravan 21,937 - 2.3 percent

Source: Autodata Corp.

Compiled from Times wires

[Last modified July 4, 2006, 01:26:28]

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