Plunging prices for used pickups and sport-utility vehicles are deepening U.S. automakers' sales slide, with Ford Motor Co. the latest company to feel the pinch.
Gasoline near $4 a gallon helped send prices for used large pickups and SUVs tumbling at least 21 percent in May, Atlanta- based Manheim Consulting estimates. That cuts trade-in values, pushing light-truck sales down 16 percent in 2008, compared with less than 1 percent for cars.
``Regular consumers don't need larger SUVs or pickups; it's a lifestyle choice,'' Standard & Poor's equity analyst Efraim Levy in New York said in an interview. ``If it's getting to be a bad investment, it's not worth buying a new one right now.''
Detroit automakers including Ford are vulnerable to the drop in pickup and SUV sales. The U.S.-based companies depend on those models for almost 70 percent of their sales and a greater share of profits than Asian competitors such as Honda Motor Co.
Industrywide sales declines led by trucks helped spur Ford's forecast yesterday for a wider 2008 loss. The second- largest U.S. automaker said it will pare output by as much as 25 percent and delay unveiling the latest version of its top- selling vehicle, the F-Series pickup. Auto-loan unit Ford Motor Credit also will post a loss, Ford said.
June auto sales in the U.S. may drop to 12.5 million, their lowest annualized rate in 15 years, according to Citigroup analyst Itay Michaeli. That would be 20 percent below June 2007 levels.
Ford fell 51 cents, or 8.1 percent, to $5.81 yesterday in New York Stock Exchange composite trading. The shares of the Dearborn, Michigan-based automaker have declined 14 percent this year. General Motors Corp. slid $1, or 6.8 percent, to $13.79 and is down 45 percent in 2008. The stock is at a 26-year low.
$6,100 Less
Used SUVs may fetch an average of $6,100 less than they did three years ago, according to Bandon, Oregon-based industry- analysis firm CNW Research. That means a possible writedown of almost $5 billion for vehicle lessors, CNW wrote on June 16.
Writedowns at the finance units of GM and Ford may be $1.5 billion and $1.1 billion, respectively, as used-truck values drop, New York-based Lehman Brothers analyst Brian Johnson said in a note yesterday.
Al Castignetti, vice president and general manager of Nissan Motor Co.'s North American sales unit, said the lenders are being squeezed by the so-called residual value they projected for the vehicles at the end of their lease terms.
``Residual values are far out of whack from where they were pegged three, four years ago,'' Castignetti said in a June 19 interview in Beverly Hills, California.
Consumers trying to unload full-size pickups and SUVs aren't faring much better than the finance companies seeing less money from auctioning off the models as leases expire, Castignetti added.