Car and truck sales sank 14 percent in October as consumers pulled back after a buying binge in the summer.
General Motors Corp. and Ford Motor Co. both said U.S. sales of cars and trucks fell 26 percent in October compared with a year earlier. Rivals such as Nissan Motor Co., Hyundai Motor Co. and Volkswagen AG also reported sales slides, though not as steep.
The October slump adds to the woes of GM and Ford, which have announced company-wide restructuring plans that include plant closings and job cuts.
Moody's Investors Service yesterday announced another cut to GM's credit rating, which has been below investment grade since April. Moody's said in a written statement that the cut reflects "greater uncertainty" about GM's ability to implement its restructuring program, stem eroding market share and rebuild North American profitability. Moody's also cited the risk of disruption in the delivery of auto parts from manufacturer Delphi Corp., which filed for bankruptcy last month, and potential implications of Securities and Exchange Commission investigations into accounting problems at GM. GM has suffered a series of downgrades from Moody's and other bond-rating agencies this year.
GM and Ford are rushing to bring out more fuel-efficient vehicles as high gasoline prices continue to cripple demand for large sport-utility vehicles. Ford said it planned to cut back SUV production by 20,000 vehicles, which represents a 3 percent reduction in the company's truck output, in the fourth quarter. GM is also lowering sales expectations for a new line of large SUVs that hit the market early next year.
The automakers relied on heavily discounted "employee pricing" sales promotions to spur sales in the summer. Now, with those promotions over, consumers may be waiting for the next big sale, dealers and industry analysts say. Typically, automakers have had big clearance sales in November and December as they race to meet year-end sales goals.
At Curtis Chevrolet in the District, new vehicle sales dropped 30 percent in October from a year earlier, said Dan Franklin, the general manager. "The present market is a bit sticky. People have gotten into the waiting stage because they want to see what's coming next" in discounts, he said.
Overall, new car and truck sales totaled 1.15 million in October, down 14 percent from October 2004, according to Autodata Corp. The sales figure does not reflect an adjustment for one less selling day in October of this year. The annual pace of sales for the industry dipped to a seasonally adjusted 14.75 million, the slowest since August 1998.
At DaimlerChrysler AG's Chrysler division, sales declined 3 percent. Toyota Motor Co.'s sales were up 1.3 percent, while sales at Honda Motor Co. were flat.
The Big Three automakers -- Ford, GM and Chrysler -- have been trying to back off from the heavy discount deals offered in the summer. The discounts were effective in clearing dealer inventories but failed to lift profits at GM and Ford.
Industry officials view the U.S. economic outlook with some concern, partly because rising energy prices are squeezing middle-class consumers. Emily Kolinski-Morris, Ford's U.S. economist, said Ford is picking up mixed signals in the data on the economy.
While a lot of high-end retailers are doing fairly well, "a lot of those in the middle are getting squeezed as consumers respond to the energy markets," she said. The auto industry, she said, is entering a "period of a little more caution."
Robert Schnorbus, chief economist of J.D. Power and Associates, said he did not think consumers were staying away from dealerships because of gloom over the economy, high gas prices, or the war in Iraq or other political concerns. "The consumer has been hit repeatedly for the last several years with bad news. It doesn't seem to throw them much off their pace," he said. "What seems to disrupt their buying is not worldly events but what the incentives are."
General Motors pickups are displayed at a dealership in Omaha. GM said U.S. sales fell 26 percent last month compared with October 2004.