GM surprises by staying at No. 1

By Kevin Krolicki  |   2008-7-3  |     NEWSPAPER EDITION

UNITED States auto sales plunged in June to a 15-year low, but a month-end clearance sale helped General Motors Corp retain its No. 1 spot and steer clear of the wipeout many had feared, sending its shares higher.

Record gas prices and declining trade-in values for big trucks and SUVs hit truck sales hard while major auto makers, including Toyota Motor Corp, struggled to keep up with demand for some popular smaller cars and hybrids.

GM was the industry's main surprise after a sale featuring zero percent financing for six years allowed the US auto maker to avoid losing sales leadership in the month to Toyota.

In a reversal of recent trends, Toyota trailed GM in June with a 21-percent sales decline, reflecting a 31-percent drop in sales of its trucks like the Tundra pickup.

Equally damaging, sales of Toyota's hybrids including the market-leading Prius hybrid dropped 27 percent as dealer inventory ran short of demand.

The Japanese auto maker sees US vehicle sales hitting bottom this year, with a modest recovery in 2009, and a substantial rebound in US auto sales in 2010 and beyond.

"GM was better than expected, and it looks like Toyota missed a big opportunity in the month," said Jesse Toprak, an analyst with industry-tracking Website Edmunds.com.

Ford Motor Co sales were down 28 percent, while Chrysler LLC sales fell 36 percent, the weakest result in the industry. Now controlled by Cerberus Capital Management, the privately held auto maker relies on light trucks for almost 70 percent of its sales.

By contrast, Honda Motor Co, which boasts the most fuel-efficient vehicle lineup among major auto makers, bucked the downturn and posted a 1-percent sales gain.

Sales for Nissan Motor Co dropped 18 percent.