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Analysts predict slower June sales for GM

Analysts predict June US sales slowing for General Motors, but say it's not all due to recalls
Posted on June 26, 2014 at 5:47 p.m.

DETROIT (AP) — A number of analysts are predicting that General Motors’ June U.S. sales will underperform the overall auto industry, putting the company in danger of losing market share at a critical time.

GM has issued 44 recalls covering 20 million cars and trucks this year as it undergoes a top-to-bottom safety review in the wake of a mishandled recall of small cars. So far, GM has announced or taken charges totaling $2 billion to cover recall costs.

While the spate of safety problems may be partly at fault, analysts say sales also could be hurt by a pullback on discounts and a drop in sales to rental car companies. Whatever the reason, a subpar month could drop GM’s market share from the 17.6 percent it held at the end of May. Chrysler, which has already gained nearly a point of market share this year according to AutoData, could be the beneficiary.

Automakers are scheduled to release sales results on Tuesday. GM won’t be the only company to trail the industry. Sales at Ford are expected to drop from a year ago as the company prepares to roll out significant new vehicles later in the year, led by the new F-150 pickup.

The Associated Press surveyed four auto industry research firms, and their forecasts for GM’s June sales range from a decline of 8.5 percent (Edmunds.com) to an increase of 2 percent (LMC Automotive) based on sales for the first three weeks.

Cars.com predicts total U.S. sales will drop 2.1 percent. One factor in the decline: last year had one more Saturday, typically a strong day for dealerships. But the market will remain on track to top 16 million in annual sales for the first time since 2007, says senior analyst Jesse Toprak.

Toprak expects GM sales to fall 6.1 percent. He partly blames buyer suspicion about safety issues and predicts that GM’s market share will drop nearly one percentage point from June of last year.

Truecar expects GM sales to fall 3 percent while the industry sees a 1 percent gain.

Truecar President John Krafcik, Hyundai’s former U.S. CEO, says GM sales will fall because it reduced discounts by $400 per car from a year ago. The company is showing “a lot of discipline” by cutting incentives in the face of the recalls, he says.

At the same time, Chrysler and Toyota, which are expected to post big sales gains, increased incentives by 8 to 11 percent, Truecar said.

GM also said that sales to rental car companies will fall this month compared with a strong June last year.

GM’s U.S. sales lagged the industry’s increase in March and April but outperformed the market in May. Through May, its sales were up 2.8 percent, compared with a 5 percent increase for the industry.

The automaker’s spate of recalls started with a recall of small cars such as the Chevrolet Cobalt with defective ignition switches. GM eventually recalled 2.6 million small cars worldwide for the problem, which it says caused at least 13 deaths and more than 50 crashes. Some members of Congress say the death toll is closer to 100.

The company acknowledged knowing about the problem for more than a decade.

Auto Writer Dee-Ann Durbin contributed.




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