General Motors Corp. said Wednesday that reduced demand in the U.S. and Western Europe helped push the company's third-quarter worldwide sales down 11 percent, as GM fell further behind Toyota Motor Corp. for this year's No. 1 global sales spot.
GM sold 2.11 million vehicles in the third quarter, while Toyota's sales for the period fell 4 percent to 2.24 million. The results bring GM's total sales for January-September to 6.66 million vehicles compared with Toyota's 7.06 million.
GM said sales declines in the United States and Western Europe offset strong demand from emerging markets. Sales outside of the U.S. grew by 164,000 vehicles in the first nine months of the year.
Mike DiGiovanni, GM's executive director of global market and industry analysis, said the same economic woes that have resulted in steep drops in U.S. sales this year spread to western Europe during the recent quarter.
North American sales dropped 18.9 percent during the quarter, while overall European sales fell 12.3 percent.
DiGiovanni said that while sales growth in emerging markets may be slowing, it's still significant. GM reported third-quarter sales increases of 15.1 percent in Russia, 15.5 percent in Brazil, 12 percent in China and 5 percent in India.
"We can't overact to some of some of the snowballing effects that have happened in the markets these past few weeks," DiGiovanni said in a conference call. "There's a lot of positive fundamentals going on around the world that are laying the bed for future growth."
Sales outside of North America accounted for 61 percent of GM's total third-quarter sales, up from 56 percent in the same period last year.
Japan-based Toyota has been vying with GM to be the world's biggest automaker by global sales. Last year, Toyota's group sales — including those from minicar maker Daihatsu Motor Co. and truck maker Hino Motors Ltd. — rose to 9.366 million vehicles, just shy of GM's 9.37 million.
Toyota's drop in third-quarter sales, which it also attributed to weak U.S. demand along with sluggish sales in its home country, marked its first year-over-year decline in the July through September period since 2001, the company said.
Toyota had posted strong U.S. sales earlier this year, as high gas prices drove consumers to its smaller, more fuel-efficient vehicles, but its September U.S. sales fell 32 percent.
For the first nine months of this year, GM's U.S. sales were down 18 percent, while Toyota sales were down 10 percent.
In midday trading, GM shares rose 18 cents, or 2.9 percent, to $6.43, while Toyota's U.S. shares rose 89 cents, or 1.3 percent, to $71.87.
GM to cutback on product development
Separately, GM is postponing some of its spending on product development in 2009 and 2010 as part of a cost-cutting effort.
A person briefed on GM's plans said Wednesday the automaker has delayed multiple projects, including new vehicles and engines, in order to cut costs. The person did not want to be identified because GM's product plans are confidential.
The trade publication Automotive News reported on its Web site that the Detroit-based automaker is cutting spending on engineering, design and development and may even delay the new Chevrolet Cruze small car, due to start production in 2010.
GM spokesman Tom Wilkinson would not say whether GM was delaying specific models or engines, but he said GM sometimes has short delays on projects.
"Often a short delay can yield significant cost savings," he said.
GM, which is spending more than $1 billion per month more than it brings in, announced a plan in July to boost its cash position by $15 billion, with $10 billion in internal costs cuts and $5 billion through borrowing and asset sales.
Industry analysts have said that at its current cash burn rate, GM's cash pile could fall to between $11 billion and $14 billion — the minimum amount needed to run the company — sometime next year. Analysts expect further cost cuts and other measures when GM announces its third-quarter earnings in the coming weeks.
Earlier this year, GM announced it would close four truck and sport utility vehicle factories. It also closed a parts stamping plant in Grand Rapids.
Wilkinson said GM has been deciding which projects to pursue.
"We are making sure we put the resources behind the programs that will make the most difference and doing it as efficiently as we can," he said.
GM announced in June that it would postpone indefinitely plans to redesign its full-size pickup trucks for the 2010 model year, instead refreshing the current model. The Chevrolet Silverado and GMC Sierra were redone for the 2007 model year.
GM announced in June that it would retool its factory in Lordstown, Ohio, to make the compact Cruze. It was considered a major victory for a region that still hasn't recovered from the demise of the U.S. steel industry.
"We don't know anything at this point," said Jim Graham, president of United Auto Workers Local 1112, which represents Lordstown workers. "Everything is rumor stage and we don't want to comment."
GM has been scrambling to ramp up production of smaller vehicles. It believes the keys to its success are the Cruze, which is expected to get about 40 miles per gallon on the highway, and the plug-in Chevrolet Volt, which can run up to 40 miles on battery power with a small gas engine extending its range.
The Volt, expected in 2010, and the Chevrolet Camaro sports car, due out in 2009, are protected from the cutbacks.
GM is in talks about acquiring rival Chrysler LLC. They have been hit by the auto industry sales meltdown due to the U.S. economic downturn and are seeking additional federal help.
