U.S. auto sales drop 37% to another low
February 3, 2009 - 12:20 pm ET
UPDATED: 2/3/09 7:00 p.m. ET
U.S. auto sales dropped 37.1 percent in January, dragged down by the
Detroit 3, as the industry posted its lowest monthly total in 27
Ford Motor Co.'s 41.6 percent fall and General Motors' 49 percent drop
were steeper than analysts' forecasts. Chrysler tumbled more than 50
percent for the second straight month. Honda, Nissan and Toyota all
slipped more than 27 percent, cementing the industry's fourth straight
monthly slide of more than 30 percent.
The annual selling rate of 9.8 million units matched a rate last seen
in August 1982. The sales total of 656,881 vehicles was the lowest
since December 1981 and marked the 15th-straight monthly decline.
The credit crunch is stifling sales, said John Broderick, general
manager of Burlington Automotive's Chevrolet store in Burlington, N.J.
"Financing is very difficult. It's the toughest I've ever seen," he
Last autumn, GMAC Financial Services effectively stopped consumer
lending, requiring credit applicants to have prime credit scores. The
GM-exclusive lender loosened restrictions in December, but said today
it financed just 5,000 purchases in January. Only one of those deals
was from Broderick's store.
GM today responded by initiating a round of incentives that includes 0
percent financing and higher rebates. The program covers some of GM's
best-selling vehicles, including the Chevrolet Malibu.
Hyundai, Subaru gain
Only two companies gained: Hyundai-Kia and Subaru. Each saw sales rise
about 8 percent. Subaru was the only automaker to record an increase
in U.S. sales last year.
Hyundai brand sales rose 12.5 percent after the debut of the Hyundai
Assurance Program Jan. 2. The plan allows customers who lose their
jobs within a year of their purchase to return their new vehicles at
no cost if they've made two payments.
"Buyers are very loyal to the Asian brands, but they're also very
price sensitive, and they might be considering Hyundai or Kia over
Toyota or Honda," said Jesse Toprak, executive director of industry
analysis for auto information site Edmunds.com.
The industry's January results reinforce projections that any recovery
won't happen before midyear. The also heighten the challenges for GM
The two companies are preparing viability plans for the U.S. Treasury
Department in order to preserve the $13.4 billion in federal loans
they have already received.
Ford is trying to continue operations without federal aid, despite
burning through $5.5 billion in cash last quarter.
Last year's light-vehicle sales dropped to 13.2 million, as soaring
fuel prices in the first part of the year and a global credit crunch
later in the year deepened a national recession. The annual sales rate
peaked at 15.6 million in January and skidded to 10.4 million in
In 2007, 16.1 million light vehicles were sold in the United States.
The biggest reasons for the decline in last month's sales rate was the
fleet market, said Ford sales analyst George Pipas. "We estimate the
industry fleet sales were down 65 or more percent from a year ago."
Ford said its sales to individual customers fell 27 percent. The
two-thirds drop in fleet includes a 90 percent decline in sales to
Ford's re-engineered F-150 pickup gained retail market share in
January, the automaker said. But total F-series sales fell 38.6
percent in January.
January fleet sales fell partly because of U.S. automakers' extended
plant shutdowns after the year-end holidays, analysts say. In
addition, some corporations took advantage of GM's December fleet
The industry started 2009 with a 94-day supply of vehicles, more than
50 percent above the level recommended by analysts.
Wary consumers crimped sales at Jim Arrigo's Dodge-Chrysler-Jeep store
in West Palm Beach, Fla. Arrigo sold 160 new vehicles in January, down
from 325 last year.
"They're not even sure if they'll have a job tomorrow,'' Arrigo said.
"They're scared to death about buying something."
The Conference Board, a market information group, said last week its
42-year-old survey of consumer confidence slid to record lows in
December and January.
Bob Carter, head of Toyota Division, said he doesn't anticipate any
rebound in the market until the second half of the year.
"There were no surprises in January for the industry and the
segments," he said. "The market turned out the way we anticipated."
Jamie LaReau, Amy Wilson and Kathy Jackson contributed to this report.