General Motors Corp and Ford Motor Co, the largest automakers in the United States, were expected to report late yesterday that May sales fell from a year ago and their US market share slump continued amid gains for Toyota Motor Corp and Nissan Motor Co.

GM and Ford, with a combined US market share of more than 40 per cent, will post lower car and light truck sales, according to each of five forecasters surveyed by Bloomberg. Overall industry sales are expected to drop to an annual average rate of 16.8 million cars and trucks, from 17.7 million in May 2004.

The year's fifth-straight month of declining market share for GM and Ford may prompt further production cuts. It may also raise pressure on GM to restructure its automotive operations, after a US$1.1 billion first quarter loss and a downgrade in its debt to "junk" level by Standard & Poor's and Fitch Ratings.

"Ever seen erosion when water runs down the hill and you can't stop it? I think it's going to be more of the same with the domestics continuing to lose ground and the Asians continuing to gain ground," said Frank Ursomarso, a Wilmington, Delaware, dealer. He sells GM's Pontiac and GMC brands, Ford's imported Volvo and Jaguar cars, and BMWs from Munich, Germany-based Bayerische Motoren Werke AG.

Ford would provide revised second quarter production plans and announce its third quarter outlook for the first time, spokesman George Pipas said in an email interview. The Dearborn, Michigan-based company cut North American production by 9.9 per cent in the first quarter and had projected a 4.8 per cent decline for the current quarter.

GM spokeswoman Deborah Silverman said she does not know if GM will discuss production plans. GM reduced first quarter output by 10 per cent and had forecast a 12 per cent cut in the second quarter.

Cutbacks predicted

GM, based in Detroit, and Ford will reduce third quarter production to trim dealer inventories of slower-selling sport utility vehicles, said Ronald Tadross, a New York-based analyst.

Through April GM's Chevrolet Tahoe sales were down 26 per cent, and sales of Ford's Explorer SUV fell by 22.5 per cent. "SUV sales are as bad as they're going to get," said David Healy, an analyst at New York-based Burnham Securities.

US demand for truck-based SUVs, such as the Tahoe and Explorer, accounted for just 12 per cent of new vehicle sales in April, the lowest level since May 1996, according to the Power Information Network, the forecasting unit of J.D. Power and Associates of Westlake Village, California.

New products

Ford's May sales could have been helped by the Freestyle, a car-based SUV, and the Five Hundred sedan, both introduced late last year, said Jim Sanfilippo, executive vice-president of Automotive Marketing Consultants Inc in Bloomfield Hills, Michigan.

GM may gain momentum with new cars such as the Pontiac G6 sedan, analysts said. That could continue with the new Chevrolet HHR, Pontiac Solstice and redesigned Chevrolet Impala, analysts said.

"The Solstice is shockingly good, and the HHR, while critically a few years late, should do very well," Sanfilippo said.

To help boost sales, GM will announce that its employee discount programme will apply to all customers through July 5, said dealer Ursomarso. GM declined to comment on the plan, which was reported in the Detroit Free Press.

Asian gains

The 10 Asian automakers that compete in the US held a record 36.5 per cent of the market this year through April, 2.3 percentage points more than a year earlier. The gains were led by Toyota and Nissan of Japan and Hyundai Motor Co of South Korea.

In contrast to GM and Ford, Toyota and Nissan last month each raised sales by more than 17 per cent, according to Jesse Toprak, an analyst at Edmunds.com, an auto industry data service in Santa Monica, California. His figures are adjusted to reflect two fewer selling days in May 2005 than in May 2004. The percentage change based on projected units sold would be about 10 per cent.

"The three big Japanese automakers currently have great strength in each of their marques, while the domestic Big Three are burdened with many weak units," Toprak said in an emailed statement.

(China Daily 06/02/2005 page12)