Fuel prices are a pain for most automakers

Posted By on June 3, 2008

logosU.S auto companies have been suffering and even the ‘rising sun’ of Toyota has had sales pains. Most of the pain has been felt by U.S. automakers as consumers don’t want gasoline thirsty pickups and sport utility vehicles in the face of $4.00/gallon pump prices. General Motors, Ford Motor and Chrysler LLC have depended on the pickup and SUV buyer and are ill prepared to weather higher priced fuels and inflationary prices over the short term. Long term, they have been reluctant to replace there larger vehicles with efficient models although GM announced the possibility of shedding their Hummer brand.

But while the three U.S. automakers and Toyota are suffering, some other Asian automakers were able to gain a bit. Honda Motor, Nissan and Kia have attracted American new car buyers and two of them have posted record sales. Honda did so well as to see their Civic model beat the Ford F Series pickup truck to become the nation’s bestselling vehicle. Ford F-series pickup sales suffers enough to also be passed by Toyota’s Camry mid-sized model.

GM didn’t only suffer from the higher fuel prices, but also by a series of strikes which affected the production of its better selling models such as the Malibu and crossover vehicles. According to GM’s management, they estimated that labor issues were to blame for 6 – 7% of their reported sales shortfall. (15,000 to 18,000 vehicles) Their chief business forecaster, Mike DiGiovaani, did say that he sees the problems behind them and that maintaining a 20% market of total U.S. sales this past month was “remarkable given the combination of labor disruptions, oil prices and a weak economy.”

CNN reported that “Chrysler LLC, the privately-held automaker that was purchased by Cerberus Capital Management last year, saw sales fall 25%. The company, which had long held the title of No. 3 U.S. automaker through 2005, fell to fifth place in sales as it was passed by Honda. Toyota is number two and Ford is the third largest in U.S. auto sales. Chrysler, which has been offering buyers a chance to lock in $2.99 gas prices as part of their purchase, said much of the decline was due to a unusually high 40% cut in monthly fleet sales to businesses such as car rental companies. The company also said that car sales fell at a higher rate than light truck sales. Still, that appeared to be the exception rather than the rule in May.”


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