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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.

2016 Lexus GS F is a .22 in a .357 world, and that might not be a bad thing

In Max Brooks' zombie epic World War Z: An Oral History of the Zombie War, the author envisions an apocalypse where the living dead necessitate a rethinking of societal behavior. One such change, among many, was the replacement of large-caliber, automatic weapons with smaller .22-caliber rounds and semi-automatic firearms that promise better accuracy when battling the undead. We're hoping Lexus used this as its inspiration when finalizing the numbers for its 467-horsepower, 4,000-pound GS F sedan. Lexus may not have brought a knife to a gun fight, but it's fair to say the firepower of its new GS F is lagging behind that of its German rivals. While BMW, Mercedes-Benz, Audi and most recently, Cadillac, are playing with force-induced V8s and power figures that are well north of 550 ponies, Lexus' kiddy table approach belies a significant weight savings against some of its rivals. At just 4,034 pounds, the Lexus is some 350 pounds lighter than the BMW M5 and nearly 400 pounds lighter than the Mercedes-Benz E63 AMG S 4Matic (that said, the Lexus is only about 100 pounds lighter than the 640-horsepower Cadillac CTS-V). We won't know if this weight advantage is enough for the 2016 GS F to outrun its competitors until we're able to drive it, though. Beyond that, Lexus has fitted the sort of tinsel typical of its high-performance models, with an even more wildly gaped fascia and vertically staggered rear exhausts. Meaty wheels and tires hide under flared wheel arches, while the cabin features far more aggressive sport seats and stylish upholstery. Take a look at our live images of the new GS F, fresh off is debut at the 2015 Detroit Auto Show.

Toyota to pay $17.35M federal fine for delayed Lexus RX recall

This summer, we brought you news that Lexus was recalling over 150,000 RX and RX hybrid crossovers tied to its massive pedal entrapment issue. An update to that story included word from the National Highway Traffic Safety Administration that it was considering launching a federal investigation into potential delays by the automaker in notifying owners about the problem. Now comes news that parent company Toyota will pay a hefty $17.35 million in fines for delaying its recall of the 2010 Lexus RX 350 and RX 450h. According to The Detroit News, the Japanese automaker is being forced to pay the maximum fine for delaying recalls - and this isn't the first time. In fact, this is the fourth time since 2010 that Toyota has been required to do so, including paying $48.8M in civil penalties in 2010 for failing to recall vehicles in a timely manner - in three separate campaigns.
In addition to the fines, Toyota has agreed to restructure the way it handles quality control and review "safety-related issues." Though the Japanese automaker has not admitted any wrongdoing, Toyota has agreed to meet with NHTSA for six months on the matter and may extend the meetings another six months.
US Transportation Secretary Ray LaHood says he is counting on Toyota to improve its ability to address such safety issues: "With today's announcement, I expect Toyota to rigorously reinforce its commitment to adhering to the United States safety regulations," he said in a statement.