Ford leads US market recovery

CAR sales in the US picked up 13 per cent in May over April on the back of improving consumer confidence and discounting.

It was the US car industry’s best month of the year to date at 926,130 units, but remained 33.7 per cent down on the same month in 2008 (compared with an average 36.5 per cent fall for the first five months of the year).

With General Motors and Chrysler in the midst of bankruptcy filings, Ford continued to grab sales from its rivals, pushing past Toyota to number two on the sales chart and recording its highest market share since 2006.

GM remains on top and has even extended its lead due to Toyota’s rapid decline, but even fire-sale prices may not prevent it sliding in coming months after filing for bankruptcy late in May.

While all the major brands increased sales in May over April, they were still well down on May 2009, with Chrysler the worst affected (down 47 per cent, but still in line with its pre-bankruptcy results) from Honda (down 42 per cent), Toyota (down 41 per cent), Mazda (down 40 per cent), Nissan (down 33 per cent), GM (down 29 per cent), Ford (down 26 per cent) and Hyundai (down 19 per cent).

Local analysts suggest that GM could be as badly affected as Chrysler in coming months, raising the prospect of further gains by Ford, the only member of Detroit’s former Big Three not affected by bankruptcy.

Ford has responded by cautiously increasing production in North America, lifting output by 2.2 per cent to 455,000 units in this quarter and by 10 per cent to 460,000 in the next quarter.

Toyota in Japan is also easing back on to the throttle after seven months of dramatic decline that has left its output at about half its peak.

Toyota president Katsuaki Watanabe said last week that production would increase from 8000 a day to 11,000 in June and July, including a big boost for the new Prius (which was Japan’s best-selling car in May, replacing the rival Honda Insight).

The company’s US sales in May were again horrible compared to last year – its market share dropped to 16.5 per cent from 18.4 per cent a year ago – but were 21 per cent higher than in April.

Although the US government will be pleased with the improved sales scenario, the Obama administration will be disturbed by a shift away from fuel-efficient cars in the wake of lower fuel prices – just as GM and Chrysler are being forced to produce them.

Sales of Toyota’s perennial small-car leader, the Corolla, dropped 55 per cent compared to May last year and its rivals fared about the same with the Honda Civic down 61 per cent, the Ford Focus down 54 per cent and GM’s Chevrolet Cobalt down 52 per cent.

With GM and Chrysler committed to government-funded recovery plans tied to more fuel-efficient vehicles, including compacts and electric cars, there is now pressure on the government to ensure fuel prices go higher.