Top 5 Not-So-Hot Vehicles in October

DETROIT TheStreet) -- In general, October was a good month for the auto industry, with an 8% sales gain and an accelerating sales pace.

But for certain vehicles, the month was not as good as it was for others.

Some models posted sales declines, as compared with the same month a year ago. Toyota ( TM) Corolla is an example, for the obvious reason that inventories were short. The Ford ( F) Edge, also posted a decline for the month, even though Ford utility vehicles gained 38% overall for the month.

Others, such as the Cruze, just didn't have as good a month as we had been used to.

Also at Ford, an entire division, Lincoln is a question mark right now, although the company is promising to completely remake the Lincoln brand, pledging the same level of improvements that have already been made in other brands. In October, Lincoln sales fell 11%.

Here is a look at five big losers in October, selected for their importance to the auto industry and not necessarily for the percentage drop in sales.

Chevrolet Cruze

We understand how totally odd it seems to put the Cruze on this list, since it may well be the most important and most successful new car of 2011 after proving that General Motors ( GM) could compete with anybody in the small car market.

However, Cruze October sales totaled just 14,295, after spending several months in the 20,000 range. The car faced tough competition from Japanese competitors, who were back in the market with incentive spending as well as pent-up demand from core buyers.

That pushed Cruze from the no. 1 compact car, which it had been for five consecutive months, to no. 3 behind Toyota Corolla with 16,244 and the Honda ( HMC) Civic with 16,173.

Questioned about the Cruze sales decline on the GM sales call, Don Johnson, vice president of U.S. sales operations, said "most of what you're seeing is a seasonal effect" as summer comes to an end.

Asked about high Cruze production levels of 26,000 to 27,000 vehicles in September and October at the Lordstown, Ohio, plant, Johnson would not be pinned down. "That vehicle continues to be a very strong seller for us," he said. "We want to make sure we do match supply with demand."

GM spokesman James Cain said 90% of Cruze October sales were 2012 models. "Our selling rate didn't change much, adjusted for the seasonal factors, but the segment grew quite a bit.

"We outsold all competitors but Civic and Corolla in the month," Cain said. "There was pent-up demand, and there were quite a few programs offered by the Japanese OEMs to retain their customers until stocks improved, including lease extensions."

Ford Edge

Ford Edge October sales dipped 10% to 9,161, despite the 38% increase in Ford utility vehicle sales. Explorer sales rose 225% to 11,987. Escape sales rose 31% to 19,046.

"Edge is co-existing with Explorer and Escape very nicely," said Ken Czubay, Ford vice president for U.S. marketing, sales and service, on the monthly sales call.

Erich Merkle, Ford sales analyst, said a full-line automaker such as Ford cannot expect to compete in the important utility segment without a full product line. That's why the Escape is an entry level utility, smaller, more fuel efficient and priced lower. Edge is a bit bigger than Escape, and Explorer is bigger still, with third-row seating, more room and a higher price tag.

"It's really shirt sizes," Merkle said, in an interview. "Shirts are not all the same size. Everybody needs something a little bit different."

"Edge had a good month," he said. "Remember that in October last year, it was up over 20% --October 2010 was a really strong sales month. This month just came in a little bit under."

For the full year, Edge sales are up 2.7% to 99,940.

Chevrolet Malibu

October sales of the Chevrolet Malibu fell 17% to 10,239. Year-to-date, Malibu sales are up 3.4% to 181,505.

About 70% of the Malibus sold in October were 2012 models, a relatively high level. "It's possible we were disadvantaged when selling against discounted 2011s at competitors," said GM spokesman Cain.

Also, he noted, "Malibu competes in a very tough segment, with increased competition from Japanese production recovery (and) we also have a design that's due to be replaced in just a few months." Both factors could have impacted sales.

Indications exist that GM was reluctant to offer much in the way of incentives for the Malibu, given the car's stellar performance over the summer, so the competition against vehicles with high incentives may have been a little bit too intense.

Lincoln

The main thing to know about Lincoln is that the entire division is playing a waiting game. Over the next three years, Ford is committed to bringing out seven new Lincoln models.

In the meantime, Lincoln sales fell 11% to 6,094 in October. For the first 10 months, Lincoln sales are up 1% to 70,935.

"Lincoln has found its level," said Ford analyst Merkle. "We dropped Mercury so we can really focus on Lincoln. That was the first step."

Recent Lincoln sales numbers have been volatile. In June, for instance, sales rose 16.5 % , a surprise for a brand that at the time was down 4% year-to-date.

"We're encouraged by June sales results, but we're on a journey, rebuilding the Lincoln brand and making it strong," said former Ford analyst George Pipas in a July interview. "That will take some time, just like rebuilding the Ford brand did."

In October, sales of the two key Lincoln products, the MKZ and the MKX mid-size crossover, were both up about 5.5%. But sales of the discontinued Town Car plunged 70% to 296, while sales of the MKT crossover lost 27% to 369 units.

Clearly, October was a tough month for luxury brands. At Cadillac, sales fell 12% to 11,795 units.

On the GM call, Kurt McNeil, vice president of Cadillac sales and service, noted that "We're seeing our competitors be very aggressive in the incentive space." McNeil said "BMW is outspending us by as much as $1,500 a unit, and Mercedes is outspending us by as much as $800."

Toyota Corolla

Corolla remained the no. 1 compact car in the U.S., even though October sales fell 12% to 16,244. Ten-month sales were down 11% to 203,135.

On the Toyota sales call, Bob Carter, Toyota group vice president of US sales, said "much of the shortfall (in Toyota October sales) can be traced to Corolla, with sales down 9.5% from last October.

"We started the month with less than half the number of Corollas in stock that we had a year ago, and we just couldn't overcome that shortage," Carter said.

"The good news is that Corolla production at our new plant in Tupelo, Mississippi started last month and cars are already being shipped to dealerships, which will help rebuild inventories," he said.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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