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New Car Sales Down 8% in February

GM, Honda Outperform the Competition

February 22, 2006

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New-vehicle retail sales declined 8 percent in the first 12 days of February compared with a similar time period a year ago, according to the Power Information Network, a real-time automotive retail sales information service.

Mid-month results are derived from actual retail transaction data collected by Power and do not include fleet sales. Retail transactions are considered the most accurate measurement of true underlying consumer demand for new vehicles.

American Honda was the only multi-franchise manufacturer to experience a retail sales gain in early February (up 4%), but several other manufacturers experienced retail sales declines that were less than the overall industry.

General Motors and Toyota Motor both had 1 percent sales declines, while Nissan decreased by 7 percent. DaimlerChrysler and Ford Motor Company both experienced declines in retail sales greater than the overall industry.

"American Honda is benefiting from positive reviews and word of mouth about its new Civic, as well as continued incremental sales of its Ridgeline midsize pickup," said Tom Libby, senior director of industry analysis for the Power Information Network. "General Motors is also showing signs of life, as it outperformed the industry for the first time in many months."

In addition to the retail sales improvement, American Honda also recorded a gain in retail market share in early February, increasing to 11.9 percent versus 10.5 percent a year ago.

Several major manufacturers increased their retail market share in early February when compared with a year ago, including GM (21.8% vs. 20.3%); Nissan (8.1% vs. 7.9%); and Toyota Motor (17.1% vs. 15.9%). DaimlerChrysler and Ford Motor both experienced decreases in retail market share when compared to early February 2005.

After the launch of an aggressive pricing strategy and several new products in early January, General Motors has outperformed the industry and gained retail market share when compared with its performance in early February of 2005.

While total industry wide new-vehicle retail sales declined 8 percent in early February, GM’s retail sales declined by only 1 percent and its share of the retail market increased from 20.3 percent to 21.8 percent. This marks the first time that GM has outperformed the industry in the past five months.

"GM's retail market share is off to a slow start, but should finish the month somewhat higher than its mid-month estimate," said Bob Schnorbus, chief economist of global forecasting at J.D. Power and Associates.

"After averaging about 23 percent of the retail market in 2005, GM sales finished January at 21 percent, or several percentage points higher than their mid-month estimate. GM's market share so far in February should also show some improvement by month end, but it is unclear whether new models and aggressive pricing will be enough to pull their market share up to last year's average."

New-vehicle manufacturers relied less on customer cash rebates in early February 2006 than they did a year ago, with the average rebate amount decreasing by 6 percent to $1,141.

Several major manufacturers reduced their average rebates substantially in February, with the average cash rebates at DaimlerChrysler and GM declining 20 percent and 15 percent, respectively. Additionally, only 48 percent of new-vehicle retail sales in early February included a rebate, down from 50 percent a year ago.

Conversely, Ford Motor and Nissan on average had larger rebate cash amounts when compared with a year ago. American Honda does not use customer cash rebates and Toyota Motor uses rebates to a much smaller degree than the domestics.

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