Thread: Gas rise posing threat to Vette
07-09-2008, 07:56 PM #1
Gas rise posing threat to Vette
Gas rise posing threat to Vette
Jul 09, 2008 (The Daily News - McClatchy-Tribune Information Services via COMTEX)
General Motors Corp. has acknowledged it is reviewing one of its brands for possible sale to help raise money, but the automaker has not said to what extent, if any, the Corvette will be affected.
Sales for nearly every automaker dropped for the month of June, with GM reporting a total of 2,082 Corvette deliveries for last month, compared to 3,055 deliveries made in June 2007.
Corvette sales for the first six months of the year are also down, with GM reporting 14,954 sales for the first half of 2008, a 15.8 percent drop from last year's total of 17,758 for the same period.
GM, which has eight brands, is reviewing its Hummer brand for possible sale, according to an Associated Press report, although that same report also cited an anonymous source who said the company was reviewing other brands in order to find money to weather a slump in U.S. auto sales.
According to Morgan and Company, an automotive research and analysis firm based in Michigan, foreign cars and trucks have comprised a majority of the vehicles sold in the United States for two consecutive months after years of dominance in the market by GM, Ford and Chrysler.
Even so, GM continued to have the largest share of the auto market among all manufacturers, domestic and foreign, last month, with 260,457 vehicles sold in its eight U.S. brands in June.
While it is not clear how the Corvette, which is manufactured in Bowling Green, will be impacted by GM's plans, a local representative said the model appears for the moment to be insulated from the larger discussion of the automaker's future.
"I don't think we've been impacted yet," said Eldon Renaud, head of the United Auto Workers Local 2164 in Bowling Green, referring to the Corvette plant.
Renaud said he doesn't believe the plant will be shedding jobs or manufacturing fewer vehicles, since Chevrolet -- the brand under which the Corvette is sold -- remains, along with Cadillac, GM's top performing brand.
Renaud did acknowledge that the decline in Corvette sales from last year is a product of an environment in which consumers beset by high gas prices are staying away from auto dealerships or looking at other vehicles that promise better fuel economy.
"I think people are trying to be more fuel-conscious right now," said Renaud, pointing to upticks in sales of the Chevrolet Cobalt and Pontiac Vibe, both of which are touted for their gas mileage. "Consumer confidence has been as low during the last year as it's ever been."
Renaud said it appears that many of the people buying Corvettes in the current economic environment are doing so out of loyalty to the brand.
GM spokeswoman Sharon Basel said the rise in gas prices presents a challenge for the industry when it comes to making sales.
"I think that the June sales in general and in the last several months have been challenging as we've seen more people switch from SUVs and pickup trucks and focus on smaller vehicles," Basel said. "You would expect to see an impact as people hold back (from buying autos) in general."
Basel said GM was looking to the future as though the increase in gas prices will not be a "short-term blip." She added, however, that it was too early to speculate on how the Corvette plant would be affected by the company's long-term plans.
"When you do look at sports vehicles, the Corvette is among the most fuel efficient in its class," Basel said. "I'm not a forecaster in terms of the luxury sports car market. If this trend continues, it will impact the industry as a whole, so we are looking at a quick and very strong counteraction."
Mark Cornelius, an analyst for Morgan and Company, said luxury car sales are down 9.9 percent for the year to date, but a more precipitous decline has been witnessed in the luxury sports car segment, which includes Corvette.
For the first half of the year, sales of luxury sports cars declined 25.5 percent from the same period last year.
"This segment includes vehicles that are usually not the primary means of transportation," Cornelius said in an e-mail. "As consumers become increasingly concerned with economic conditions, home values and cost of oil primarily, sales of big-ticket luxury items ... have been falling."
Cornelius said that there may be reason for GM to be concerned about the performance of its Buick and Pontiac brands, with the possibility of selling either of those brands to secure more cash on hand.
Cornelius also forecast further job cuts for GM, probably after the company board of directors meets early next month.