Shares of GM and Ford fall on gas and economy woes
06-18-2008 | 11:13 PM
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Shares of GM and Ford fall on gas and economy woes
NEW YORK (Associated Press) - Shares of General Motors Corp. and Ford Motor Co. tumbled Wednesday as worries about a slumping economy and rising oil prices boosted fears that automotive sales could drop more this year than previously expected.
GM shares dropped 93 cents, or 5.9 percent, to close at $14.89.
Earlier in the day, shares dropped as low as $14.75, marking GM's lowest stock price since March 19, 1982, when adjusted for stock splits and other distributions, according to the Center for Research in Security Prices at the University of Chicago.
Ford shares fell 38 cents, or 5.8 percent, to close at $6.22 after earlier trading as low as $6.09. Over the past 52 weeks, the Dearborn, Mich.-based automaker's shares have traded between $4.95 and $9.70.
Deutsche Bank's Rod Lache cut his 2008 U.S. light vehicle sales prediction to 14.5 million vehicles from 14.9 million. He also lowered his estimates for 2009 and 2010.
Additionally, Lache predicted significant third- and fourth-quarter production cuts at GM, Ford and privately held Chrysler LLC, citing the industry-wide drop in light truck demand.
Lache said that based on a recent survey of dealers, U.S. sales of light vehicles appear to be tracking at about 13 million units for the first half of June on a seasonally adjusted annual sales rate basis.
The rate, known as SAAR, indicates what sales would be for the full year if they remained at the same pace for all 12 months.
By comparison, the first quarter's SAAR was 15.2 million, while April's was 14.4 million and May's was 14.3 million.
"In addition to weakening customer traffic, dealers report that they are now suffering from a mismatch between what consumers want to buy (small cars), and what they have in inventory (pickups and SUVs)," Lache wrote in a note to investors.
"Limited availability of smaller, more fuel efficient vehicles may be a factor in depressing the SAAR to surprisingly low levels," he added.
The analyst also cut his earnings estimates for the next three fiscal years for both GM and Ford.
Lache said GM needs to put in place an "aggressive" restructuring plan, and that it's unlikely that the automaker will be able to sustain eight different brands and over 13,000 franchises with its current 20 percent market share.
GM shares dropped 93 cents, or 5.9 percent, to close at $14.89.
Earlier in the day, shares dropped as low as $14.75, marking GM's lowest stock price since March 19, 1982, when adjusted for stock splits and other distributions, according to the Center for Research in Security Prices at the University of Chicago.
Ford shares fell 38 cents, or 5.8 percent, to close at $6.22 after earlier trading as low as $6.09. Over the past 52 weeks, the Dearborn, Mich.-based automaker's shares have traded between $4.95 and $9.70.
Deutsche Bank's Rod Lache cut his 2008 U.S. light vehicle sales prediction to 14.5 million vehicles from 14.9 million. He also lowered his estimates for 2009 and 2010.
Additionally, Lache predicted significant third- and fourth-quarter production cuts at GM, Ford and privately held Chrysler LLC, citing the industry-wide drop in light truck demand.
Lache said that based on a recent survey of dealers, U.S. sales of light vehicles appear to be tracking at about 13 million units for the first half of June on a seasonally adjusted annual sales rate basis.
The rate, known as SAAR, indicates what sales would be for the full year if they remained at the same pace for all 12 months.
By comparison, the first quarter's SAAR was 15.2 million, while April's was 14.4 million and May's was 14.3 million.
"In addition to weakening customer traffic, dealers report that they are now suffering from a mismatch between what consumers want to buy (small cars), and what they have in inventory (pickups and SUVs)," Lache wrote in a note to investors.
"Limited availability of smaller, more fuel efficient vehicles may be a factor in depressing the SAAR to surprisingly low levels," he added.
The analyst also cut his earnings estimates for the next three fiscal years for both GM and Ford.
Lache said GM needs to put in place an "aggressive" restructuring plan, and that it's unlikely that the automaker will be able to sustain eight different brands and over 13,000 franchises with its current 20 percent market share.
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