ALSO ON AUTOS
Toyota Continues to Lead
Rival GM in Global Sales
July 23, 2008 4:20 p.m.
General Motors Corp.'s global sales fell for the second straight quarter as sinking U.S. sales more than offset growth in foreign markets, pushing the auto maker further behind rival Toyota Motor Corp. in the global sales race.
The numbers released Wednesday by the auto makers underscore the importance of emerging markets such as China, Brazil and Russia as the slump in the U.S. deepens and the Western European market shows signs of weakening.
GM sold 2.3 million vehicles in the quarter that ended June 30, a 5% drop from a year ago, while Toyota's sales during the period rose 2% to 2.4 million. For the first six months of the year, Toyota sold 4.8 million cars and trucks while GM, which has long been the world's largest auto maker, sold 4.5 million.
The U.S. auto maker continues to notch double-digit gains in emerging regions, where increasing populations and a growing middle class have pumped up demand for vehicles. The company's Asia Pacific sales gain of 15% was sparked by a 33% increase in sales by its Chevrolet brand in China.
GM, like many U.S. industrial companies, is looking to sustained growth overseas to offset sinking sales in critical developed markets, namely the U.S. and Western Europe. As the global economic environment sours, there are questions about whether robust growth rates will be maintained in emerging markets.
GM, which has been restructuring its North American operations for three years, said Wednesday it expects growth in emerging markets to drive a 2.5% increase in global auto industry sales, to 72 million vehicles, in 2008. But that growth isn't keeping pace with declines in GM's oldest and most established markets, adding pressure on the auto maker as it struggles to restore profitability.
"There's just not quite enough volume in these emerging markets to offset weakness in North America," Mike DiGiovanni, GM's executive director of global markets and industry analysis, said during a conference call to discuss the quarterly sales figures.
Western Europe Market Slumping
Outside North America, GM's sales were up 10% in the second quarter to account for nearly two-thirds of the company's global sales.
But GM's sales in North America fell 20% to 963,929 vehicles, as weak economic conditions and high fuel prices have caused consumers to abandon the pickup trucks and sport-utility vehicles that have long sustained Detroit auto makers. GM says it has also suffered with an inability to produce enough small cars to meet demand for fuel-efficient offerings.
In Europe, GM reported a 2.5% sales increase to 589,700 vehicles, thanks in large part to booming sales in Russia. GM noted that auto industry sales in Western Europe were down 3% in the first half of the year, while Central and Eastern Europe showed a 25% increase.
Soaring commodities costs, a troubled housing market and shaky consumer confidence -- the same troubles dragging down vehicles sales in the U.S. -- are beginning to weigh in Western Europe.
On Tuesday, Nissan Motor Co. Chief Executive Office Carlos Ghosn said the auto industry is entering a global slowdown now that European auto sales are starting to decline and sales growth in China is moderating.
Amid the weakening sales environment, Toyota said last week that it is reviewing its global sales plan for 2008. Local Japanese media recently reported that the company will likely cut its world-wide sales target for this year to around 9.5 million vehicles from the currently planned 9.85 million.
GM is also reworking production plans. The company recently announced plans to significantly scale back production of trucks and SUVs in North America while boosting capacity for hot-selling smaller vehicles and accelerating efforts to introduce fuel-efficient cars.
Toyota and GM have downplayed the significance of the closely watched sales race playing out since last year's first quarter when Toyota passed GM for the first time. GM, which had seen its global sales rise steadily until 2008, recovered the sales lead later in the year, but only by a few thousand cars and trucks.
Toyota didn't break out its performance in individual regions in its announcement of the global sales results Wednesday. It previously announced that U.S. sales fell 7% in the first six months of the year compared with the year-ago period. Its sales in Europe declined 5% in the January-May period compared with a year earlier.
Toyota's sales results include vehicles sold by its two subsidiaries, Daihatsu Motor Co. and Hino Motors Ltd.
Write to Sharon Terlep at sharon.terlep@dowjones.com and Yoshio Takahashi at yoshio.takahashi@dowjones.com
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