Ford Motor Co. sees a 2.5% boost in May sales -- mostly in the hot sport/utility vehicle (SUV), pickup and minivan segment -- but announces plans to cut back production of passenger cars by 16.5% in the third quarter due to less-than-enthusiastic spring sales. General Motors Corp. and Chrysler Corp. sales drop 5.7% and 3%, respectively. Overall U.S. vehicle sales are down 1.3%, the fifth straight month of decline. For GM, it's annual two-week July corporation-wide facility shut down couldn't come at a better time to prevent an abundance of inventory. Chrysler, on the other hand, plans to up its truck output 2.7%. As sales slow, rebates and incentives accelerate, which will cut into automakers' bottom line. Ford ups the incentive on Taurus from $1,000 or 6.9% financing to $1,500 and 5.9% financing. Chrysler redirects TV ad money for its new minivans to rebates and discounted leases and is reported to be spending $1,000 per vehicle on the rest of its lineup. Maybe now Mr. Kerkorian will understand why Mr. Eaton wants to keep that $7 billion in the bank.
