Auto sales dropped again in November, the major U.S. manufacturers reported Friday
as they began retrenching themselves with production cuts, Associated Press (AP)

The clearest picture of trouble came from Ford, which warned that sagging sales
and production cuts in North America and Europe would drop fourth-quarter profits
10 cents a share – or roughly $US190 million – below expectations. It also said
it would idle passenger car plants for the last week in December to cut inventories,
but declined to be more specific.

Ford’s moves came the same day as the Chrysler side of DaimlerChrysler announced
a series of temporary plant shutdowns aimed at trimming swollen stocks of unsold
cars and trucks.

General Motors saw its sales fall along with Ford and Chrysler, and said its
inventories were running high, but did not announce any plant shut-downs.

PA says that the results are yet another sign of fatigue in the US economy,
as consumers react to higher interest rates, energy costs and a jittery stock

"I think it’s more of an easing, but it’s an easing that the Big Three
weren’t looking for when the quarter started,” David Healy, analyst with Burnham
Securities, told AP. "It may be more of a return to normal than it is a
recessionary collapse.”

With some automakers yet to report, industry sales appeared to fall 3 to 4%,
as sales slowed from furious rate of earlier this year.

Ford said its US sales in November were down 8%, with cars down 17% and trucks
down 3%. The decline led Ford to announce it would cut its North American production
for the fourth quarter by 39,000 vehicles, evenly split between cars and trucks.

George Pipas, Ford’s sales analyst, told AP that the truck production cuts
would come from eliminating overtime at factories building the Ranger and F-Series
trucks in November and December. He said some passenger car factories would
be idled for the week beginning December 18, but declined to give specifics.

"We plan to keep our inventories in line with customer demands,” Pipas
said. "We are more likely to adjust production downward than to increase
incentives, and that’s what we’ve done.”

The US sales decline hit most of Ford’s cars and trucks. The Ford Explorer
sport utility vehicle was down 12%, a decline Pipas attributed in part to the
Firestone tyre recall, as well as sales of the new Escape SUV.

GM’s sales were also down 8%, as cars fell 9% and trucks fell 7.5%. Paul Ballew,
GM’s director of sales analysis, told AP that the decline came not just from
a slower general market but from "payback” for an aggressive loan incentive
GM offered on several models in October to boost sales.

Ballew said GM’s inventory was "a little high” at about 1.3 million vehicles
– or about 75,000 more vehicles than the company had in October, according to
figures from Ward’s Automotive Reports. At GM’s combined October-November sales
rate, that would give the automaker about 90 days’ supply – far above the industry
standard of 60 days.

But Ballew told AP that GM needed a slightly higher inventory than its competitors
because it has the most brands and the most models.

"We are not planning any additional incentive actions outside the normal
course of business,” he said. "We look at our inventory as being a bit
high, but we view it as manageable”

And once again, AP say, GM appears to be poised to lose market share to its
competitors this year, just as it has for the past few years. Ballew said the
surprising strength of the Korean manufacturers in the cheap end of the market
had cut into GM’s share, but that the company would try to regain next year
with trucks and pickups.

Chrysler said its sales were down 5%, with cars down 15% and trucks down 2%.
The company said on Friday that it would idle two plants next week, one plant
the week beginning December 11 and five plants beginning the week of December
18 to trim inventories.

Foreign manufactures reported a more mixed picture. Japanese manufacturers
claimed generally higher sales, with a 4% increase at Toyota, a 3% increase
from Honda and a 7% increase from Nissan.

Volkswagen said its sales were up 8%, while several European luxury brands
posted gains. Healy told AP that import sales would remain strong even as the
general economy slowed.

The slowdown "will affect the whole industry, but it’s very likely with
all the new products from import brands, they’ll continue to increase market
share in 2001 at the expense of the Big Three,” he said.