If you're one of those people who believes GM has a coherent turnaround plan, or in fact believe in this unspecified, entirely elastic strategy for a return to profitability, you might want to take note of the fact that General Motors is locked in the PR version of Groundhog Day. As we've pointed-out many times, GM PR always saves its bad news for a Friday and/or makes major announcement on the same day it gets hit with disastrous numbers. This coming Tuesday (June 3) will be no exception. Automotive News [AN, sub] reports that GM CEO Rick Wagoner will reveal his new new turnaround plan (cut!) on the same day the company's May sales figures hit the wires. Amidst a predicted 10 percent overal U.S. new car sales drop, "analysts expect sales to drop 22 to 25 percent at GM and as much as 22 percent at Ford. Sales at Chrysler are also expected to be down by more than a fifth, according to analyst forecasts." As bad as those numbers will be, they won't be so bad for the transplants. Honda will post a gain, and "Toyota Motor Corp. is expected to reach a record market share… expected to reach 18.1 percent, up from 17.3 percent in the same month last year and 17.5 percent from last month." In other words, GM– and the rest of The Big 2.8– are losing sales and share. Gas prices, market shift, down economy, great sales in Russia; yada yada yada. As some point, the spin will stop. 

Filling-up the Odyssey the other day, I was surprised when the wallet-drainage started slowing down at $48. Of course, I knew what wasn't coming: anything more than $50 worth of gas. As an a tax paying member of the world's most pampered people, I found it incredibly annoying that I had to restart the entire sales process for an additional $8. As a free marketeer, I found it bizarre that a large corporation (Shell) would make it hard for me to spend MORE money. Turns out it's the credit card companies– Visa and Mastercard– who are limiting millions of gas purchases to $50 in some states, $75 in others. As USA Today points out, even $75 won't do it for many fuel hungry behemoths. "At $4 a gallon, $75 buys 183/4 gallons. A 2008 Toyota Sequoia SUV's tank holds more than 26 gallons, a Chevy Avalanche sport pickup totes up to 311/2 gallons, and a 33-foot or longer Winnebago Adventurer RV hauls 75 gallons." While environmentalists may have little sympathy for the Devil, the credit card companies claim the limits protect their customers from fraud. Sure, in the same way they write-off fraud rather than upgrade members' card security with photo-embedded plastic or thumb print biometrics. Profits before people? No way.

[Can anyone tell me if their TTAC RSS feeder is working?] 

Like us, Edmunds.com keeps an eye on monthly car sales. And by God they have noticed a trend! Or, a "Seismic Shift," as they demurely put it. Yes folks, its true: Americans are *gasp* buying fewer trucks and SUV's in favor of *gasp* more fuel efficient crossovers and compact cars. But don't ask the year-to-date sales numbers or blame four dollar gas, because Edmunds has analysis. "The (seismic) shift" writes Edmunds scribe Dale Buss "has occurred both in actual transactions and in shopping trends measured on the Edmunds.com site. Until March, this pattern of segment migration had been accelerating markedly but rather gradually. But a 10 percent increase in U.S. gasoline prices in March and April alone, to an average of $3.44 a gallon, appears to have provided the catalyst for a shift that is bigger and faster than any ever tracked by Edmunds.com." Wait, did he just say "shopping trends on the Edmunds.com website"? To be fair, you could learn a thing or two from Edmunds. Take their insistence on categorizing the Honda Accord and Chevy Malibu as "compact" cars. Sure, the EPA calls the Accord a "large car" and the Malibu a "midsize"… but they only base that off of the actual interior volume. Jamming these cars into the "compact" category and then calling it a statistical "seismic shift" is a pretty laughable ploy. Ultimately, the facts of auto sales trends speak pretty well for themselves. And yes, by facts I do mean actual transactions.

Cars.com's Kicking Tires blog reports a low supply of the badge-engineered Toyota Land Cruiser Lexus LX570. The big rig's specs are impressive enough to bring tears to any fan of a full-figured SUVs: 5.7-liter DOHC V8 good for 383hp and 403 ft.-lbs. of twist, 8500 lbs. towing capacity, and a manufacturer claimed 0 – 60 time of 7.4 seconds (presuming the only ass you're hauling is your own). The LX570 starts at $74,700 and ascends from there, from the Technology Pack ($4200) to rear DVD ($1990) to cargo net ($64). The not-so-PC-SUV guzzles gas at a wallet-emptying EPA rating of 12/18 city/highway. Given the temper of the times (i.e. gas prices), it may come as no surprise that the upmarket LX570s is outselling its downmarket Land Cruiser cousin by 50 percent. We're talking small numbers, though. "Lexus doesn't build 60,000 a year; rather, less than 10,000,” Global Insight analyst Aaron Bragman reveals. “If the high-volume Chevrolet Tahoe was down to a four-days supply with gas at $4 a gallon, it would be a different story. It's not that demand is high… supply is kept low so that the LX 570 is at a four-days supply of unsold inventory rather than at 100 days and has to be discounted." 

As has been pointed out here many times, there are lies, damn lies and statistics. And depending on which statistics you're looking at, they can be used to support whatever you want to say. For example, Ford is number three in sales. Or Honda, depending on which statistic you're looking at. As far as total sales year to date are concerned, FoMoCo (781,791) is still solidly in third place, after GM (1,058,014) and Toyota (789,447) while Chrysler's staked out forth place (601,622) and Honda's trailing in fifth (487,642). However, Automotive News reports that if you factor out low-profit fleet sales, Honda moves to third and Ford drops to fourth. That's because retail sales make up only 65 percent of Ford's total sales and Honda's fleet sales are negligible. So Honda's retail number remains unchanged while Ford's drops to approximately 421k. So who's really number three? We report, you decide.

The Wall Street Journal reports that "Chrysler LLC is betting its new Dodge Ram pickup truck, coming this fall, can pull customers from rivals." Dodge is finally offering a crew cab version and is counting on it to for super-sized help. "I don't think there's any question that we can gain market share," said Ken Zangara, a Dodge dealer in Albuquerque, N.M. "The question is how big will the overall market be?" Yeah, that's the question alright! When even the dealers offer qualified optimism for a new product you know things are bad. Dodge has massive overcapacity in trucks with three factories poised to crank out over 600k trucks per year compared to 2007 sales of about 358k units (this year's numbers are even worse). Ram sales tumbled 24 percent so far in 2008, which means Chrysler has 1.5 truck factories too many. UPI and others report a massive glut of used trucks on the market which are both competing against new truck sales and killing trade-in values for potential new truck buyers. Year on year trade-in comparables are down 14 percent. A nose job and crew cab option are not going to lift Dodge out its permanent third wheel status. But not to worry, soon Nissan will get a version of the Ram to not sell. 

Automotive News [AN, sub] reveals that ChryCo's been running the "Chrysler Multi-Million Dollar Mystery Shop Challenge" since May 12 (way to stay on top of a story). From that fabled date until the end of the year, "the automaker will conduct more than 20,000 mystery shopper visits, roughly one for every sales consultant at every dealership." Salespeople who pass the test with "flying colors" are entered into a draw for $1k. Woo-hoo! Only AN forgot to ask how many C-notes will be awarded. Anyway, is Chrysler checking the honesty and integrity of their dealers' sales staff? You know: making sure there's no bullying or misrepresentation? Are they Hell. "Chrysler hopes the program will get the sales force focused on the attributes of its vehicles… Chrysler claims the program can be a motivational tool and can focus its sales force on promoting the virtues of its vehicles, rather than deals." As churlish as this sounds, is that really a good idea?

As well it might, what with the price of gas at the $4 a gallon mark (apologies to our foreign readers for our pump shock). A quick digression… I love salesmen. Yes, they invented the word oleaginous. Yes, they are, in the main, morally compromised individuals. But there are very few other members of our society who're paid to be optimistic– especially in the face of disaster. That scene in Planes, Trains and Automobiles, where loser salesman Del Griffith sells plastic curtain rings to passengers at the bus terminal, is a perfect illustration how a salesmen can go from zero to hero in a heartbeat. Now, when I got a press release "RV Rental Firm Takes the 'Bummer' Out of Summer with Gas Rebate Promotion," I sensed the hand of a master. So I called Rob Tischler, President of Allstar Coaches, and stuck it to him. The resulting interview explains why Death of a Salesman is a comedy in Russia. If you know what I mean. [apologies for the audio quality]

According to the (appropriately-named) SubPrime Auto Finance News, you can blame the cratering housing market for collapsing new-car sales. "Lower equity translates into an inability to borrow against the house to buy a car," opines Art Spinella of CNW Research. This is especially true in California and Florida, where new car buyers lead the league table for tapping into their home equity to finance a new whip. As of six months ago, California's supply of unsold new houses was running in excess of 80 months. Spinella reckons the Golden State's (and thus America's) auto sales recovery depends on reducing the staggering inventory of unsold new homes. So, Art, when? "Probably not until the final quarter of this year or the first quarter of next, but in either case a California turnaround will benefit all auto sales in 2009." Meanwhile, the number of homeowners who are "upside down" on their home loans is adding more fuel to the pyre. In fact, some  68 percent of those who bought homes in 2005 owe more than the house is worth. Ouch.

The Center for Automotive Research (CAR) at Gelsenkirchen University of Applied Sciences has released a report which claims that 2007 will have been the historical high-water mark for diesel sales in Germany. Reported in Auto Motor Und Sport, the study shows a steady climb in diesel market share over the last decade, from 14.6 percent in 1995 to 47.7 percent in 2007. But CAR calculates that market share will retreat to 44 percent by 2010 before diving back to 30 percent by 2020. With US diesel sales still a ways from a predicted 15 percent market share by 2015, Germany is still the major, which is why the projected decline is so significant. The underlying causes are simply related to the shrinking economic incentives for buying diesels. Diesel has traditionally been cheaper than gasoline in Germany, but that difference is slipping away and in America diesel is significantly more expensive. Additionally, diesels require increasingly complex particle filters and exhaust cleaners to meet new emissions standards, driving up purchase costs. Finally, gas engines are simply becoming more efficient, especially as hybrid drivetrains proliferate. In short, if diesel's most favored market is moving away from the stuff, this trend will only grow. With news coming in that VW's new Jetta TDI won't be as efficient as the Prius, don't expect diesel sales to jump stateside anytime soon.

January 13, 2008. Reuters. "Ford Chairman Bill Ford on Sunday said the automaker's plan to return its North American operations to profitability in 2009 is 'progressing very well.'" May 23, 2008. Automotive News [sub]. "Ford Motor Co. said today it will cut North American production and retreated from earlier profit outlooks, saying it expects only 'to be about break-even' before taxes in 2009." About? What's that, give or take a couple hundred million? Anyway, Ford's slicing North American production by 15 percent in the second quarter, down 20k units to 690k vehicles. And you can bet that the majority (if not all) of those not-produced vehicles will be high-profit trucks and SUVs. A statement from CEO Big Al Mulally just about said as much. "The challenge affecting the entire industry is the accelerating shift in consumer demand away from large trucks and SUVs to smaller cars and crossovers — combined with a steep rise in commodity prices and the weak U.S. economy." FoMoCo's "how low can you go" ain't done yet. The Blue Oval Boyz are dropping third quarter production by 15 to 20 percent and fourth-quarter production another two to eight percent. Or, come to think of it, more. 

The Nikkei [via Business Week] reports Japanese Domestic Market (JDM) new car sales have improved slightly in the first quarter of 2008. But the number of automobiles on Japanese roads has fallen for three months straight (down 0.2 percent last quarter). That's the largest cumulative dip since record-keeping began in 1963. The Japanese government predicts traffic will peak by… 2010. Japan's population is slowly declining. More importantly, the cost and hassle of car ownership in the densely-populated island nation is driving people to alternatives. Imagine paying $400 per month on a Tokyo parking spot, and you're beginning to get the picture. As world governments milk the four-wheeled cash cow in the name of planet saving, expect more lower and middle-class motorists to be priced right off the roads. Japanese consumers bought some 282,600 Electric bicycles last year, up some 40 percent in the last five years. sts priced off the roads. In one of the worst first quarters for auto sales in recent memory, the U.S. scooter market jumped 23 percent, according to the L.A. Times. The times, they are a-changing.

MSNBC reports on dismal sales of the overhyped Dual Mode Yukotahoe Hybrid, currently running hundreds of units per month. Given its $50k+ price tag and complete lack of wiggle room on price (especially compared to its non-hybrid counterparts), this comes as little surprise in the extremely price-sensitive US market. Unfortunately GM and their hybrid transmission factory, projected sales were 10-15k units this year. That's not quite as bad as TTAC's whipping boy (the Cadillac BLS), but underutilized capacity is a Very Bad Thing in this economic climate. What does this mean for the upcoming Saturn Vue Dual Mode Hybrid? It's estimated $30k price tag just might be the sweet spot. Or not. GM's losing ground in the hybrid SUV race on a daily basis. In the Yukotahoe Hybrid's price range, Toyota's already sold 5,553 Lexus RX 400h's this year. And in the Vue's venue, they've sold 8,889 Highland Hybrids. Even Ford is leaving them in the dust, with 7,132 Escape and Mariner Hybrids out the door since January 1.  

The harsh realities of a mature US automotive market are wrecking havoc on the plans and finances of all the players. The Wall Street Journal reports that 15 million units is about the best the industry can hope for in '08. That's back to the future, 1990s style. Even market share-gobbling Toyota senior executives admitted they have "about a full plant's worth of excess capacity in North America– not including the Tupelo plant due to open in 2010." Holy excess capital expenditures Batman! The master of production planning has hit the wall. Bottom line: the US is a stagnant, mature market where new cars are competing for replacement business, not growth. Meanwhile, more manufacturers are threatening to enter the US market. The Chinese and Indians (Tata) are chomping at the bit, and Alfa-Romeo has announced plans to return… soon. Analysts forecast a return to growth in the decade ahead. Still, clearly, not everyone's going to make it.

According to The Star [via Wheels.ca], Canadian new-car sales rose a bit over nine percent vs. the previous financial quarter. This represents the strongest single-quarter sales gain since way back in the middle of 1998. Analysts attribute the growth to lower prices, incentives and a one percent reduction in the goods-and-services tax (GST). The largest gains (17.8 percent) came from sales of passenger cars. Meanwhile, driving.ca reports on April sales, noting that GM's share of the Canadian pie slipped 13.5 percent. GM said "the drop was a planned reduction in low-profit sales to daily rental fleets." The company spun the news by pointing out that retail sales of The General's passenger cars went up by 23.8 percent in the month of April. Anyway, Ford's Canadian sales slipped by 4.5 percent last month. Winners include Chrysler, up eight percent in April, thanks to a 38 percent increase in the number of minivans driving off the lots. Chrysler Canada adds that it enjoyed its 21st consecutive increase in monthly sales, noting that (just like GM), the company deliberately cut back on fleet sales. Not bad, eh?