U.S. Auto Sales Likely Fell on Fuel Prices, Lack of Small Cars

U.S. auto sales probably dropped again this month as consumers spurned pickup trucks and sport- utility vehicles because of soaring gasoline prices and couldn't find enough fuel-efficient cars, reported The Bloomberg.

The decline to the lowest sales rate in 15 years was led by Ford Motor Co., Chrysler LLC and General Motors Corp., according to a Bloomberg survey of analysts. Japan's Honda Motor Co., less dependent than the U.S. companies on trucks, may be the only major automaker to report an increase when sales are released tomorrow.

``It's like the perfect storm,'' said John Schenden, owner of Pro Chrysler Jeep in Denver. ``You either have to hang on to the old big truck you've got and spend too much on gas, or look for the smallest cars -- which so many people are turning to.''

A decrease would extend the industry's sales slump to eight straight months, the longest tumble in seven years. Gasoline prices in June topped $4 a gallon for the first time and consumer confidence hit a 16-year low, prompting more Americans to postpone purchases of new vehicles.

Those who did buy were drawn to cars and ``crossover'' wagons that blend car and truck features. On June 1, the industry had the lowest supply of cars for that date in at least 17 years, according to trade publication Automotive News.

Inventories of compact cars and hybrids are ``going down at a rate we've never really seen before, and automakers are caught a bit unprepared,'' Jesse Toprak, an Edmunds.com analyst in Santa Monica, California, said in an interview. ``It might take several years to fully meet the consumers' demands.''

GM's sales decreased 21 percent, Ford's 19 percent and Chrysler's 25 percent, according to the survey of five analysts.

Ford and Detroit-based GM, whose shares plunged to respective 23- and 34-year lows last week, announced plans this month to boost car and wagon output while deepening cuts in truck production in an attempt to end losses. Dearborn, Michigan-based Ford hasn't posted an annual profit since 2005; GM was last profitable in 2004.

The SAAR, or seasonally adjusted annual rate, a measurement of sales without regard to seasonal fluctuations, probably fell to 13.2 million cars and light trucks last month, down 16 percent from 15.7 million a year earlier, based on a Bloomberg survey of 30 analysts and economists. That would be the lowest since March 1993.

U.S. auto sales are on a pace to plunge to 14.5 million units for 2008, the lowest in 15 years, according to Deutsche Bank. The annual industry average this decade has been 16.8 million.

``Limited availability of smaller, more fuel-efficient vehicles may be a factor in depressing the SAAR to surprisingly low levels,'' Rod Lache, a Deutsche Bank analyst in New York, said in a June 17 note.

This month has three fewer selling days than June 2007. That means Detroit's automakers will report figures roughly 12 percentage points lower than the analysts' adjusted estimates.

Alex Khan, a dealer at Carr Chevrolet in Beaverton, Oregon, said he hasn't been able to provide what shoppers want. ``We've been running out of our smaller-car inventory,'' Khan said in an interview, citing GM's Cobalt as an example.

GM is ramping up production of cars and smaller SUVs by almost 50,000 units this year in response to consumers' ``close attention to fuel-efficiency,'' sales chief Mark LaNeve said in a June 23 conference call with reporters.