Business

Toyota may top GM in U.S. sales for the 1st time

Toyota Motor Corp. could overtake General Motors Corp. in monthly U.S. sales for the first time in June, but the victory could be hollow as the weak economy continues to pummel the auto industry and even Toyota struggles to meet U.S. consumers' sudden and insatiable demand for hybrid cars.

Analysts are predicting another double-digit dip in June sales, in large part because buyers are shunning big vehicles. Automakers report sales figures Tuesday.

J.D. Power and Associates, a marketing and consulting company, predicts the annualized sales rate for June – which shows what sales would be if they continued at the same rate for a full year – could be 12.5 million vehicles, the lowest monthly rate since 1992.

Jesse Toprak, chief industry analyst for the auto information site Edmunds.com, predicts sales will be down 13 percent in June to 1.26 million, or an annualized rate of 14.9 million.

Toprak said GM could see an uptick in the last few weeks because of a zero-percent financing deal that began Tuesday, but it won't be enough to stem the automaker's losses in trucks and SUVs.

“Consumers are either postponing their purchases or buying smaller, more fuel efficient vehicles to a degree we have not seen before,” Toprak said.

Falling home values, weak consumer confidence and high gas prices have taken their toll on auto sales, which had seen seven consecutive months of declines as of May, the longest period of consecutive declines in eight years, according to Edmunds.com.

When customers do buy, they're picking smaller cars, crossovers and hybrids. The demand for fuel-efficient vehicles has been a boon to Japanese automakers like Toyota and Honda Motor Co., which rely less on trucks and sport utility vehicles than the Detroit Three, while Ford Motor Co. and GM are having a hard time keeping up with consumer interest in hybrids.

In May, Toyota sold just 9,340 fewer vehicles than GM and grabbed 18.4 percent of the U.S. market share, compared with GM's 19.1 percent. As recently as 2005, GM controlled 26 percent of the U.S. market to Toyota's 13 percent.

Still, Toyota, which saw sales drop 4 percent in May, is having problems. The automaker has been unable to ramp up production of its Prius and Camry hybrids to meet demand.

Prius sales fell 38 percent in May, and Toprak said Toyota probably could have sold double the number of Priuses it sold that month if it had adequate supply.

Toyota spokesman John Hanson said the company set its production schedule before the run-up in gas prices and can't increase production because it doesn't have the plant capacity and other specialized components.

“No one saw this coming, as far as the huge leap in oil prices and the rapid response by consumers to move into smaller cars,” he said. “We simply haven't been able to keep up with our product plan.”

Toyota makes 250,000 Prius hybrids per year, with 60 percent to 70 percent allocated to the U.S. .

Hanson said Toyota has considered building a new U.S. plant to make the Prius and other hybrids. John McEleney, who owns a Toyota dealership in Clinton, Iowa, said he expects to be sold out of Priuses until at least November. In the first two quarters of this year, he had a 60- to 90-day waiting list for the Prius, but that has jumped to a six-month wait. .

“As a rule, people have either decided to get on the waiting list or just postponed the sale,” he said.

Other automakers also have had trouble meeting demand for hybrids.

Ford spokeswoman Jennifer Moore said Ford set production at 25,000 for the Ford Escape and Mercury Mariner hybrids this year and won't be changing that, despite high Ford will begin offering hybrid versions of the Ford Fusion and Mercury Milan sedans later this year, she said.

  Comments