Auto sales fall double-digits in February, OEMs cutting production

General Motors, Ford and Chrysler all reported double-digit U.S. sales declines in February, reflecting signs of a possible slowing economy (or perhaps, lessening demand for gas guzzlers).

Toyota and Nissan also reported sales declines, while Honda actually did the best among major automakers with an increase of nearly 1 percent in February sales.

GM's sales slid 16% thanks to weaker demand for large trucks like the Chevy Silverado, or SUVs like the Tahoe and Saturn Vue. GM said it would cut second-quarter production by 5% from year-ago levels.

Ford sales fell 10% and will cut second-quarter production by 10 percent. Ford is also facing weaker demand for its F-Series cash-cow, as well as the Explorer and Expedition SUVs.

Chrysler sales dropped 17% on weaker demand for its Jeep SUVs, as well as its Ram pickup truck and minivans.

"There was a two-week period that closed the month that was pretty stale," said Ford chief sales analyst George Pipas. "That was true for Ford; it was true for the industry."

The Japanese automakers aren't immune to the trend either.

Toyota's February sales fell 6.6% overall, including a decline of 6.3% for the Toyota side, and another 9.3% for its luxury Lexus brand. Overall sales of both cars and trucks weakened for Toyota.

Nissan's sales fell 3%, which includes a decline of 3.2% for its Nissan brand, and a relatively minor 0.4% dip for its luxury Infiniti brand.

However, Honda sales edged higher as truck sales, led by its Pilot and CR-V SUVs, actually rose about 2 percent.

It's hard to say whether the famed "credit crunch" is the cause of all this, or if it's a reflection of the ridiculous gas prices we're all enjoying right now. Either way, the trend away from trucks and SUVs (at least for The Detroit Three) might have more of an effect on satellite radio than just the drop in production.

Last week, XM Satellite Radio CEO Nate Davis said that there are two main factors that cause the conversion rate to vary by OEM partner: the type of vehicle sold, and the engagement level.

"...the more SUVs you have, the more high-end cars you have - the higher the conversion rate," said Davis. "The lower, the low-end cars, the less [the conversion rate] is."

The 2nd factor that XM cited for conversion rate is engagement level - highlighting that joint promotional programs and the maturity of the OEM relationship tend to have better conversion rates.

It will be interesting to see how this pans out for the long term. But for the near term at least, over auto demand doesn't seem to be improving.

[Reuters]