Brakes Locked For U.S. Auto Sales
Tight Credit, Consumers' Fears Stymie Carmakers
An unsold 2008 F-150 pickup truck sits under a sign at a Ford dealership in the southeast Denver suburb of Centennial, Colo., on Sunday, Nov. 2, 2008. Ford Motor Co. said Monday, its October sales dropped 30 percent as low consumer confidence and tight credit continued to keep buyers out of showrooms. (AP Photo/David Zalubowski)
(David Zalubowski - AP)
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Tuesday, November 4, 2008
Oil prices may be steadily dropping, but tightening credit markets and slumping consumer confidence have continued to keep Americans away from auto dealerships.
Automakers reported yet another month of steep sales declines yesterday -- the worst in 17 years. Industry-wide, they sold 838,156 new cars, minivans and trucks in October, a collapse of about 32 percent compared with October 2007, according to preliminary data released yesterday by the industry research firm Autodata.
"These are very challenging times," said Ford sales analyst George Pipas.
General Motors, Toyota, Ford and Chrysler, the four largest automakers in the U.S. market, all reported double-digit nosedives. GM said sales plummeted 45 percent compared with October of last year. Toyota's sales eroded 23 percent, and Ford's fell 29 percent. Chrysler reported a 35 percent drop.
U.S. sales total 11.6 million for the year so far, down about 15 percent, according to Autodata.
"It's really an unsustainably weak level for all manufacturers," said Mike DiGiovanni, GM's executive director of global market and industry analysis. "This is clearly a severe, severe recession for the U.S. automotive industry and something we really can't sustain."
Seasonally adjusted, the October data translate into 10.56 million sales on an annualized basis, the slowest pace since February 1983. In recent years, the rate hovered around 16 million.
"I have to say when the industry is hovering around 11 million, there are no hot segments or really hot products," Pipas told investors.
GM shares fell about 2 percent, to close at $5.65. Ford dropped about 3 percent, to $2.13. Toyota's American depositary receipts rose about 1 percent to $76.66.
As in September, auto executives tied the latest reports -- or what Mark LaNeve, head of GM sales and marketing, called "ugly red numbers" -- to the snowballing effect of the wild stock market, shrinking retirement accounts, turbulence in the housing market and this summer's dramatic oil price spikes.
"If you adjust for population growth, this is probably the worst industry sales month in the post-WWII era," LaNeve said.
As household budgets contract, autos are among the first big-ticket purchases to go. And even if consumers are inclined to buy, some are being turned away because they can't secure financing.
