February 2009 Auto Sales
NEW YORK (CNNMoney.com) -- U.S. auto sales plunged 40% in February, the
latest sign of trouble for the battered industry.
The weakness was broad-based, with sales of virtually every vehicle
offered by the nation's six largest automakers falling at least 10% from
Sales tracker Autodata estimates that industrywide, cars and light
trucks sold at a seasonally adjusted annual rate of 9.1 million vehicles
last month. That's the lowest level since December 1981. A year ago,
this sales rate was 15.4 million.
And some suggested the current sales slump may be far from over.
Emily Kolinski Morris, senior U.S. economist for Ford Motor (F, Fortune
500), said that while industrywide fleet sales showed some improvement
from January when rental car companies pulled back sharply on purchases,
sales to consumers fell sharply again in February.
"It implies we have not reached the bottom, and pushes that bottom out
to some point yet to be determined," she said.
Mike DiGiovanni, director of sales analysis for General Motors (GM,
Fortune 500), said rising job losses and worries by nearly one in three
Americans about the future of their jobs is keeping potential buyers
from even considering buying a car.
"Americans are hunkering down, pulling in their horns. They're afraid,"
Bob Schnorbus, chief economist for J.D. Power & Associates, said that
jobs were only part of the problem. He said credit is still tight,
keeping many people who want to buy a car from being able to do so. He
added that the recent decline in stocks is also keeping consumers from
Schnorbus also pointed out that the annual sales rate is now well below
the 11 million to 13 million vehicles that are normally sent to the
scrap heap each year. This could be a sign that there is some pent up
demand building for autos, even if the economy doesn't dramatically improve.
"If you could free up the credit and get the dread and despair out of
the economy, you could see sales picking up without a huge surge in
economic activity," he said.
No automaker spared the pain
Sales at GM tumbled 53%, worse than the 48% drop forecast by sales
tracker Edmunds.com. Total sales in the month also fell short of the
very weak level from January.
There were few bright spots for GM. The best the company could say was
that it is seeing improved customer traffic in its showrooms, and that
sales to consumers were down 42%, a more modest decline than the overall
drop. But a 75% drop in fleet sales hit the overall sales figure.
Ford's sales plunged 48% from a year earlier, slightly better than the
forecast of a 50% decline from Edmunds.
Sales of the company's F-Series pickup, which had been the nation's
best-selling vehicle until last year's gas price shock, were down 55%
from a year ago. Total sales at Ford were slightly higher than in
Toyota Motor (TM), which is second in U.S. sales, reported that sales
tumbled 40% from a year ago, roughly in line with Edmunds' forecast of a
39% drop. According to figures from sales tracker Autodata, it was the
largest year-over-year sales drop ever for the company and the worst
level of total monthly sales since 1999.
Chrysler LLC was one of the only automakers to report results
significantly better than forecasts and January sales levels. The
company posted a 44% drop in sales compared to a year ago, but Edmunds
had forecast a 55% decline.
Some industry experts said the company was helped by having the most
aggressive sales incentives. Edmunds estimates that Chrysler offered an
average of $5,566 in incentives on each vehicle sold, nearly twice the
Chrysler executives told reporters the incentives were part of a
deliberate decision to shift away from fleet sales. The company said its
retail sales fell only 26% from a year earlier. By comparison,
Chrysler's fleet sales toppled 71%.
Honda Motor (HMC) reported that its sales tumbled 38% while Nissan
(NSANY) said sales dropped 37%. Both numbers were a bit worse than
Ford and GM cutting production
In response to this bleak outlook, GM and Ford also announced Tuesday
they are cutting production in North America. GM's production will be
down 34% from a year earlier, although it will be sharply higher than
production during the first quarter, when GM left most assembly lines
closed throughout January.
Ford is cutting its second quarter production by 38% compared to a year
Weak demand has prompted GM and Chrysler, which have received $17.4
billion in federal loans between them, to ask for another $21.6 billion
in federal assistance to see them through the downturn.
And Toyota announced Tuesday that its financing arm was in talks with a
government-backed bank in Japan about a possible loan.
Ford, which went into the current crisis with a better cash position,
has thus far not asked for federal loans. But it has requested a $9
billion line of credit in case sales don't improve soon.