Detroit Free Press

DETROIT – American consumers avoided Detroit’s trucks in June, as they have throughout the first half of the year, and the pain to the Detroit auto industry just seems to get worse with every passing month.

Sales of the traditional domestic brands plunged by 18.5 percent last month, led by GM’s 26 percent decline.

Overall, sales in June fell 10.5 percent compared with a year ago. However, comparing June results to the same month a year ago is complicated by the abnormal sales phenomenon created last year when GM launched its “Employee Pricing for Everyone,” which sent sales surging.

For the first half of the year, General Motors Corp., Ford Motor Co. and DaimlerChrysler AG, whose Chrysler Group is based in Auburn Hills, Mich., on Monday reported that they sold about 400,000 fewer vehicles so far this year than last – or about two plants’ worth of annual production.

All of the domestic automakers are in the midst of summer sales promotions to get consumers back in their showrooms.

GM has just begun a “72 Hour Sale,” Chrysler has launched its “Employee Pricing Plus” and Ford is promoting a “Drive on Us” program. None of those, however, may be able to drive consumers into showrooms like GM’s stand-out “Employee Pricing for Everyone” effort did last year.

For now, high gas prices, rising interest rates and intense competition from some foreign automakers, who enjoy a reputation of more fuel-efficient vehicles, are taking a bite out of auto sales in Detroit.

Chrysler, with the help of its popular 300 sedan, had been outperforming its crosstown rivals in recent years, but that is clearly no longer the case. All of Detroit’s automakers posted sales declines in June and now find themselves in the negative for the year.

Sales through June were off 12.3 percent for GM, 4.1 percent at Ford and 4.9 percent at the Chrysler Group. A strong performance at Mercedes helped offset Chrysler’s performance, resulting in a 3.3 percent decline for DaimlerChrysler.

“I would describe the first half as a challenge,” Paul Ballew, executive director of global market and industry analysis at GM, conceded.

Consumers bought 8.4 million vehicles for the first half of the year, which is about 2.4 percent less than a year ago. Detroit’s automakers performed worse than that, with a collective decline of 7.5 percent.

Industrywide, car sales were up 2.5 percent through June, while truck sales fell 6.3 percent – and this intensifying consumer shift has hurt Detroit more than it helped.

Some Detroit cars performed exceptionally well in June. Sales were up 85.3 percent for the Chevrolet Impala, 123 percent for the Dodge Charger and Ford-brand cars sales gained an overall 10.7 percent.

But car sales are not offsetting the decline of Detroit trucks, which are plummeting. Truck sales through June were down 13.1 percent at GM, 9.3 percent at Ford and 8.8 percent at Chrysler.

Most of the biggest truck declines are of mid size SUVs, but full-size pickups also seem to be taking a hit.

So far this year, sales were off 17.5 percent for the Chevrolet Silverado, 6.5 percent for the Dodge Ram and 1.9 percent for the Ford F-Series.

Automakers believe most truck customers are waiting to buy new pickups, rather than switching to vehicles that are less profitable for automakers, like cars or crossovers. But they weren’t sure how many buyers might be making a shift out of the segment altogether, which would be a concerning development.

“We believe that on the margin there are full-sized truck buyers who are opting out,” said George Pipas, the top sales analyst at Ford. “But the exodus rate from the segment just doesn’t seem to be near the magnitude of what we’ve seen over the last two years in the full-sized utility segment.”

The continuing fall of trucks, the most profitable vehicles to Detroit automakers, might taint the companies’ bottom lines, which will be revealed later this month. Financial performance announcements are scheduled for July 20 at Ford, July 26 at GM and July 27 at DaimlerChrysler.

Meanwhile, Toyota Motor Corp. and Honda Motor Co. keep on chugging along, picking up sales and market share. Sales for the year are up 9.8 percent at Toyota and 7.1 percent at Honda.

Nissan Motor Co., which is considering a proposal to buy a stake in GM and form an alliance with the world’s largest automaker, seems to be suffering in the United States market. Sales of Nissan cars and trucks are down 5.7 percent for the year – a worse performance than those of Ford or Chrysler.

Ford also reported that it expects sales to fall even more for the remainder of the year.

John Loman, whose Loman Auto Group owns both a Ford and Chrysler-Jeep dealership in Parsippany, N.J., said the new incentive programs did boost sales over the weekend – though those sales were not included in the June figures. On the heels of major incentive announcements, sales were up more than 30 percent compared to a typical weekend, he said.

“If they’re on the edge, it motivates them,” Loman said.

Long-term, however, high gas prices and rising interest rates remain major concerns, he said. With their expenses going up, people are staying away from buying a new car.

“People in my area are just tapped out,” Loman said.

Steve Landry, Chrysler Group vice president of sales, said Chrysler’s truck inventory at the end of June was too high. Landry said that next month’s Employee Pricing Plus program will address the imbalanced 91-day supply of 99,691 cars on dealers’ lots compared with 548,004 trucks.

“We have high expectations of the program, so I think you’ll see smaller numbers when we do this call next month.”