GM Struggles Against ‘Headwinds’ as Sales Slip 24.2%

Harsh economic factors and regional disparities dragged down General Motors Corp.’s June deliveries by 24.2%, adjusted for sales days, according to Ward’s data.

There were 27 sales days in June, vs. 26 in like-2006.

The soft housing market and conditions in California, where sales are “underwater right now and struggling,” were prime contributors to GM’s “disappointing” performance, says chief sales analyst Paul Ballew.

California is the nation’s largest new-vehicle market.

While bright spots included consumers’ continued fascination with the auto maker’s new midsize cross/utility vehicles – the Saturn Outlook, GMC Acadia and Buick Enclave – GM’s high-stakes pickup offerings also suffered from stiff competition.

Deliveries of the all-new Chevrolet Silverado and GMC Sierra fullsize pickups plunged 26.4% and 29.2%, respectively. Both are based on the auto maker’s re-engineered GMT900 platform.

Sales of those vehicles were adversely affected by an aggressive incentive campaign to boost the fortunes of an emerging competitor, Toyota Motor Corp.’s redesigned Tundra. The new fullsize Tundra could be had with rebates of up to $3,500, plus interest-free financing.

“The battle’s there and Toyota’s jumped in,” Ballew tells analysts and journalists during a teleconference.

In addition, Chrysler Group was offering discounts of up to $6,000 on its Dodge Ram pickups, which are being redesigned for ’09.

GM launched its own initiative last week, but Ballew says it was centered around the July 4 holiday. “The (incentives) program wasn’t meant to drive a hard close in the month of June,” he adds.

Outlook, Acadia and Enclave sales totaled nearly 15,000 units in June, but Ballew notes GM’s supply was constrained because the vehicles are early in their launch cycles.

“Enclave (demand) is beyond inventory constrained,” he says. “Dealers are sending us lots of cards and letters, which is a nice problem to have.”

Heading into the year’s second half, Ballew predicts “some of the headwinds will dissipate as we get some moderation in gas prices.”

But he doesn’t expect significant relief at the pumps, where the national average for a gallon of regular unleaded is $2.95, down from $3.16 this time last month.

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