Will Chevy's Malibu Bring Financial Sunshine To GM?
Monday, December 03, 2007SUSIE GHARIB: November was a turkey of a month for General Motors, the nation's biggest auto maker, but its rivals managed to hold their own. Sales at GM fell 11 percent last month to 261,000 vehicles. That drop came despite solid gains in two key new models -- the newly redesigned Chevy Malibu and the Cadillac CTS. Ford Motor notched a slight sales gain, up 0.4 percent to 182,000 cars and trucks. Even rival Toyota had a difficult November, as consumers struggled with rising fuel prices and sliding home values. Its sales rose only 0.3 percent. Chrysler sales fell 2 percent to 161,000 cars and trucks. As Diane Eastabrook reports, U.S. auto companies and dealers are looking ahead to next year with uncertainty.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Chevrolet dealer Mark Scarpelli says he's had a hard time keeping the new Chevy Malibu in stock since it rolled into showrooms last month.
MARK SCARPELLI, CHEVROLET DEALER: It's General Motors anticipation that they are going to sell 200,000 of these in 2008. At the rate in which we are all selling them I think they have underestimated the demand. I think it's going to be a wonderful seller for them.
EASTABROOK: If Scarpelli is right, the Malibu could be one of the few bright spots for the U.S. auto industry next year. Global Insight predicts U.S. auto companies will sell about a half a million fewer vehicles next year than this year. Auto analyst George Magliano says rising mortgage rates from sub-prime loans are primarily to blame.
GEORGE MAGLIANO, AUTO ANALYST, GLOBAL INSIGHT: You see more and more problems emanating out of sub-prime and more and more problems that number one are going to cause money to be taken out of the consumers' pocket.
EASTABROOK: Magliano says how auto companies respond to a more challenging U.S. economy will determine how profitable they will be. Incentives could be more prevalent. General Motors for example recently rolled out zero percent financing on remaining 2007 models and analysts think it could be extended to poor performing 2008 models. Magliano also believes auto makers will tweak production plans more often next year based on monthly sales numbers.
MAGLIANO: You have to restrict the flow of cars and trucks going into the dealerships in order to keep the pricing at a reasonable level and in order to hope to sell what you're producing.
EASTABROOK: While Scarpelli admits the auto industry faces some potholes, he remains optimistic. He thinks new union contracts and massive restructurings will help the industry better navigate in a tougher economy.
SCARPELLI: I think they are poised pretty well to be able to be much more adaptable than they had been three years ago.
EASTABROOK: Industry watchers say the holiday shopping season could be a good indicator as to how vehicle sales perform next year. They think if consumers opt to buy big ticket items this holiday shopping season, they might opt to buy cars and light trucks next year. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.
