DENVER - I'm in the airport here, waiting to take part in a Motor Trend project. There's a Crocs store near the wired-up food court, full of unsold plastic clogs in a variety of colors. The Crocs booth reminds me of a Chevy or Ford or Dodge dealership overflowing with colorful Silverados and Tahoes, F-150s and Expeditions, Rams and Durangos. Except that you don't need to take out a loan to buy those shoes, which like the trucks are quickly falling in popularity.
Yes, vehicle sales took a big dive again in July, compared with July 2007. And Chrysler president Jim Press is very happy. He says that Chrysler earned a gross profit (earnings before interest, depreciation and amortization, or EBIDA) of $1.1 billion in the first half of 2008, exceeding expectations set last year when the company "reorganized" (and cut production). Chrysler is private, and doesn't need to divulge such information. But when it makes a gross profit, announcing it helps quiet analysts and pundits who have put a "deathwatch" on Detroit's number-three automaker.
The news follows General Motors' announcement earlier in the day that it lost $15.5-billion in the second quarter, its third-worst result ever. Meanwhile, if you're keeping score, ExxonMobil earned $11.7 billion in the last quarter, a record for any kind of business, anywhere, ever. (Ford Motor Company lost $8.7 billion in the second quarter.)
At GM and Ford, management spoke of the credit crunch becoming as big a factor in car sales as gas prices, which coincides, of course, with strict cutbacks in lease programs - the sort that in recent years could get you in much more car or truck than you could afford, the same way E-Z mortgages could get you into that McMansion you always wanted. GM's Mark LaNeve says the automaker's July lease take rate was about 10 percent, down from a year-to-date total of 17-percent of sales. Quoting J.D. Power, he says Chrysler was leasing 26 percent, Honda 21 percent, Nissan 23 percent, and Toyota 15 percent.
Ford's lease rate is about 17 percent and "trending downward," says the Blue Oval's Jim Farley, Press's old colleague at Toyota.
With its leasing done with as of Friday, Chrysler announced its "Shop Until You Drive" program, which Press says allows you to buy a car for about the same monthly payment you needed to lease. In other words, price incentives: up to 28 percent off a Jeep Grand Cherokee, up to 25 percent off other SUVs, and up to 40-percent off the Dodge Ram, so Chrysler can make way for the new '09 model.
"In 38 years in the business," Press says of car/truck sales, "this is just about the biggest challenge I've seen."
Still, he's upbeat, because Chrysler is becoming the size of automaker (smaller than Honda) that it needs to be. Press sees the current market as "normal" and recent 17 to 18 million unit years, with customers buying or leasing more than they could afford every two or three years, as the anomaly. (This year's market will struggle to stay above 14 million units.)
Before I get to a brief look at the winners and losers, here are three numbers that have nothing in common, except that they're all-new models with nothing to compare from last year. And at least two of them are ill-timed to the current market: Ford sold 2204 Flexes in July; Pontiac sold 1472 G8s and Dodge sold 2895 Challenger SRT8s.
And now to the more relevant numbers:
*GM sold 235,184 units, off 26.7 percent from July '07.
Sales gainers included Chevy Malibu (+79%), Aveo (+17%), Cobalt (+4%), Pontiac G5 (+17%), Vibe (+7%), G6 (+6%), Saturn Aura (+24%), Sky (14%, but offset by a nearly equal drop in Solstice sales), and the best Astra month ever (1,555), plus Buick Enclave (+28%, but far too little to offset Lucerne and LaCrosse drops) and Cadillac CTS (+38%).
Obviously, this wasn't enough to keep trucks and big SUVs from growing cobwebs on dealer lots. The Hummer division dropped 61.7 percent to 1,877 units. That's for all three models. And even CUVs Saturn Outlook (-29.2%) and GMC Acadia (-5.2%) were off, as was Chevy Impala (-37%). Like other automakers, GM says it's running short on some small models like HHR (-10.8%) and could have sold more Aveos and Cobalts if it had stock.
*Ford Motor Company sold 156,406, off 13 percent, and Volvo, counted separately, sold 5,124 cars and trucks in the U.S., off 46.3 percent. Every Volvo model except C70 posted double-digit decreases. Ford plans to increase Focus production to 280,000 in '09, up from 245,000, and will double four-cylinder engine production as part of its recently announced restructure. Four-bangers made up 72 percent of Fusion sales last month, and stands at 58 percent year-to-date. Nearly half of Ford's unsold inventory consists of F-150s.
Focus average transaction price is up $750 for the new model. But Ford's crossover sales may have peaked, with Edge off 6.5 percent and Escape off 16.2 percent (there is a new model). Still not as bad as Expedition sales, which plummeted 57.5 percent. Mercury sold 572 Mountaineers last month, down 61.1-percent from July '07. Gainers included Fusion (+13.5%), Focus (+15.6%) and Mustang (+0.3%). But the Mustang, like the Ford Crown Vic and Mercury Grand Marquis were up largely due to planned sales to rental agencies (the Crown Vic/Grand Marquis are fleet-only). All Lincoln models dropped, except for the new MKS.
*Chrysler LLC sold 98,109, off 29 percent.
Chrysler Town & Country (+24%), Dodge Avenger (+2%) and Jeep Patriot (+4%) were offset by Dodge Caravan (-12%, but 3,449 Journeys more than made up for that), Chrysler Sebring (-31%) and Jeep Compass (-46%). Other losers included Chrysler 300 (-31%), PT Cruiser (-54%), Aspen (-45%), Dodge Caliber (-9%), Dakota (-24%), Ram (-27%), Charger (-15%), Jeep Wrangler (-31%), Liberty (-42%) and Commander (-54%). The hybrid SUVs could not come quickly enough. Dodge Durango was off 84 percent.
*Toyota sold 197,424, off 11.9-percent.
Camry and Corolla were up, but short supply continues to affect Prius, which was down 8 percent. Tundra was off 42 percent.
*Honda sold 138,744, off 9.2 percent, based on selling days. (GM, like its Detroit brethren, has stopped using this practice for counting sales.)
Cars were up 6.7-percent, trucks were down 27.8-percent. Fit hit a record 12,266 units, up 78.5 percent. Civic Hybrid was up 27.4 percent and Accord was up 2.8 percent. Acura was down 17.7 percent, with TSX the only bright spot.
*Nissan sold 95,319, up 0.1 percent. It's gaining on Chrysler, which ought to make Cerberus happy.