Open

Coming up

Don't miss

Replay


LATEST SHOWS

IN THE PAPERS

'Caution, another Cast Lead lies ahead'

Read more

BUSINESS DAILY

Rising into the ranks of Haute Couture

Read more

DEBATE

Gaza: How to Stop the Spiral? Israel Readies For Ground Offensive

Read more

DEBATE

Gaza: How to Stop the Spiral? Israel Readies For Ground Offensive (part 2)

Read more

MEDIAWATCH

A thin line between fact-checking and propaganda in Gaza social media coverage

Read more

#THE 51%

Sweden: A Feminist's Paradise?

Read more

FOCUS

Ireland's missing babies cast light on dark history

Read more

WEB NEWS

World Cup 2014: Germany-Brazil inspires the Web

Read more

THE INTERVIEW

Boutros-Ghali: 'I wanted to reform the UN'

Read more

  • Video: Living in Tel Aviv, under threat of rocket attack

    Read more

  • Video: Palestinians fear full Israeli military offensive in Gaza

    Read more

  • Amazon snubs French free delivery ban with one-cent charge

    Read more

  • Manhunt as FIFA partner flees Rio hotel to avoid arrest

    Read more

  • US prepared to negotiate Gaza ceasefire, Obama says

    Read more

  • French companies will have to accept anonymous CVs

    Read more

  • Ukrainian forces close in on Donetsk

    Read more

  • Germany asks US intelligence station chief to leave country

    Read more

  • UN chief Ban Ki-moon appoints new Syria mediator

    Read more

  • Video: Muslims in China confront obstacles to Ramadan fasting

    Read more

  • Tour de France passes WWI Chemin des Dames battlefield

    Read more

  • Senegalese man awarded French visa in gay marriage debate

    Read more

  • Foiled French jihadist ‘targeted Louvre and Eiffel Tower’

    Read more

  • Obama in Texas to urge congressional action on child migrant crisis

    Read more

  • Iraq’s heritage 'in danger' from ISIS militants

    Read more

GM skids, posts 15 billion dollar loss

©

Latest update : 2008-09-05

As oil prices climbed, automotive manufacturers lost out with low sales figures. The largest US carmaker, General Motors, posted a massive 15.5 billion dollar loss in the second quarter, four times worse than market expectations.

US auto sales braked hard in July, automakers said Friday, as consumers avoided big-ticket spending in the face of rising unemployment, falling home prices and tight credit.
  
New vehicle sales last month crawled at a seasonally-adjusted annual rate of 12.55 million units, the slowest pace since April 1992, compared with 15.48 million units a year ago, industry research firm Autodata said.
  
"Breathtakingly weak!" said Dana Johnson, chief economist at Comerica Bank.
  
The overall US sales figures were much lower than expected, analysts said.
  
"The economic factors that strained the demand for new vehicle sales in the US for the first half of '08 are still with us, full force," said Jesse Toprak at Edmunds.com.
  
General Motors, the largest US automaker, set the stage for the dismal monthly reports before the stock market opened.
  
The struggling global giant posted a massive net loss of 15.5 billion dollars in the second quarter, in particular due to a weak US auto market and hefty charges accumulated in restructuring to adjust to the downturn.
  
Buyers still willing mostly turned to fuel-efficient vehicles as gasoline prices soared.
  
Profitable, fuel-guzzling trucks and sport utility vehicles (SUVs) stayed on dealership showroom floors.
  
GM's adjusted loss per share was four times greater than market expectations.
  
"The second quarter this year has been one of the fastest-changing markets I have ever seen," Ray Young, GM's chief financial officer, said in a conference call with reporters and analysts.
  
GM later announced its US sales plummeted 26.7 percent in July from a year ago.
  
Ford, the number-two US automaker, said its domestic sales fell 14.9 percent while Chrysler reported a 29 percent decline.
  
Ford predicted the tough market conditions would only get worse.
  
"We expect the second half of 2008 will be more challenging than the first half as economic and credit conditions weaken," said Jim Farley, Ford group vice president.
  
Ford estimated industry-wide sales were down 11 percent in the first half of 2008.
  
"We are writing a new chapter in the auto industry story as customers, dealers and companies adjust to a changing environment," said Jim Press, president and vice chairman of Chrysler, the number three US auto manufacturer.
  
The picture among the Big Three's big Japanese rivals was mixed.
  
Toyota sales slid 18.7 percent and Honda sales dropped 9.2 percent, while Nissan trucks helped drive that company's overall sales 8.5 percent higher.
  
Rebecca Lindland, an analyst at Global Insight, said the market was a struggle, especially for the big manufacturers, but some smaller companies "were doing quite well."
  
South Korea's Kia saw sales rise five percent, Japanese rival Subaru had a gain of 5.4 percent and sales by Mercedes-Benz of Germany shot up 25 percent, she noted.
  
"There's a lot of variation in the results that we're getting," Lindland said. "It plays into the very hectic and uncertain market we're in."
  
David Healy at Burnham Securities noted would-be buyers were finding credit harder to get: "The cost of auto loans have actually gone up."
  
Carmakers, including the nimble Japanese companies, acknowledged challenges in getting the mix of production and inventory aligned with the shifting market.
  
Toyota, citing the "limited availability" of its hot-selling Prius, said it had sold 14,785 of the hybrid vehicles in July, 15 percent fewer than a year ago.
  
"Having the industry's most fuel-efficient lineup is of value to us so long as we have the right product mix in our showrooms," said Jim Lentz, president of Toyota's US division.
  
Global Insight's Lindland said that "Toyota, Honda and Nissan continue to benefit from a stronger cash position and a healthier balance sheet than GM, Ford or Chrysler" in the market turmoil.
  
Nevertheless, Toyota's sales are down for the year to date, Honda is up but Nissan is down about one percent, she said.
  
"There are very few manufacturers that are really immune from a very difficult market."

Date created : 2008-08-02

Comments

COMMENT(S)