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The next steps automakers could take after sales drop again in April

DETROIT (Reuters) - Major automakers on Tuesday posted declines in U.S. new vehicle sales for April in a sign the long boom cycle that lifted the American auto industry to record sales last year is losing steam, sending carmaker stocks down. The drop in sales versus April 2016 came on the heels of a disappointing March, which automakers had shrugged off as just a bad month. But two straight weak months has heightened Wall Street worries the cyclical industry is on a downward swing after a nearly uninterrupted boom since the Great Recession's end in 2010. Auto sales were a drag on U.S. first-quarter gross domestic product, with the economy growing at an annual rate of just 0.7 percent according to an advance estimate published by the Commerce Department last Friday. Excluding the auto sector the GDP growth rate would have been 1.2 percent. Industry consultant Autodata put the industry's seasonally adjusted annualized rate of sales at 16.88 million units for April, below the average of 17.2 million units predicted by analysts polled by Reuters. General Motors Co shares fell 2.9 percent while Ford Motor Co slid 4.3 percent and Fiat Chrysler Automobiles NV's U.S.-traded shares tumbled 4.2 percent. The U.S. auto industry faces multiple challenges. Sales are slipping and vehicle inventory levels have risen even as carmakers have hiked discounts to lure customers. A flood of used vehicles from the boom cycle are increasingly competing with new cars. The question for automakers: How much and for how long to curtail production this summer, which will result in worker layoffs? To bring down stocks of unsold vehicles, the Detroit automakers need to cut production, and offer more discounts without creating "an incentives war," said Mark Wakefield, head of the North American automotive practice for AlixPartners in Southfield, Michigan. "We see multiple weeks (of production) being taken out on the car side," he said, "and some softness on the truck side." Rival automakers will be watching each other to see if one is cutting prices to gain market share from another, he said, instead of just clearing inventory. INVESTORS DIGEST BAD NEWS Just last week GM reported a record first-quarter profit, but that had almost zero impact on the automaker's stock. The iconic carmaker, whose own interest was once conflated with that of America's, has slipped behind luxury carmaker Tesla Inc in terms of valuation.

TMG Lexus LS Sports 650 destined for production after 2015?

There's little question that Lexus has succeeded in challenging its German rivals in the luxury marketplace. And with the LFA, it has proven that Japan can build a world-class supercar. What's left blank is the space in between.
Toyota Motorsport GmbH came up with a compelling answer in the form of the Sports 650 prototype, a Lexus LS with a 5.0-liter twin-turbo V8 producing 641 horsepower and other go-fast components to challenge the likes of the Mercedes-Benz S63 AMG and Audi S8. Toyota boss Akio Toyoda was reportedly so impressed with the project that he initially ordered TMG to build ten examples - one for him and each of his nine best friends. But since the model on which the project was based has since been replaced, questions remain over the project's fate.
Georg Kacher - European correspondent for Automobile and Car magazines - recently drove the prototype and reports that "the project will now likely be transferred to the new model out in 2015." That could come down purely to speculation, but Kacher tends to get the inside line on industry news, so this particular bowl of gossip soup might not requite the usual grain of salt we otherwise might add.

Earthquake causes most of Toyota's Japan operations to shut down

Toyota is idling a large portion of its Japanese assembly plants as a result of the devastating earthquake in Hokkaido, Japan. The earthquake had such a big effect on the carmaker's supply chain that a number of its plants will have to be shut down for an undisclosed period, starting on Saturday. The 6.7 magnitude earthquake occurred early on September 6 th, resulting in more than dozen casualties and hundreds of injuries, cutting power to the entire island; the powerplant supplying half of the island's power was located so close to the earthquake's epicenter that it shut down automatically, bringing down the rest of the island's grid with it. Tens of people were also reported missing, as reported by Reuters. The affected factories are the Kyushu, Tahara and Toyota Auto Body plants, according to Automotive News, and they manufacture vehicles such as different Lexus models and the Toyota Land Cruiser. Some of the models produced in these factories are exported to the United States, but a Toyota spokesman said that North American operations are not likely to be significantly affected by the plant closures. As well as the automobile assembly plants in Hokkaido, Toyota also has a facility there that manufactures transmissions and transfer cases. As it was also without power, Toyota could not confirm when the plant would be back online. Out of Hokkaido's 2.95 million households, 1.54 million had regained power by Friday afternoon. All in all, Toyota has 18 manufacturing facilities in Japan; spokeswoman Akito Kita said that from Monday on, the shutdown will affect all Japanese Toyota and Lexus lines — not including two Daihatsu facilities that are also used for Toyota products. The shutdowns come directly after Toyota also announced a recall for Japanese-built hybrid models, mainly Prius. Related Video: