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Thu, Feb 05, 2009 - Page 10 News List

Automakers start year with sales in reverse


Consumers frightened by the prospect of losing their jobs stayed away from auto showrooms again last month and sent US car and truck sales falling 37 percent, a familiar refrain for the struggling industry but an unwelcome start to a critical year for US carmakers.

Devastated by an economy in which few people have the spare cash to buy a car or can obtain the financing to do it, Chrysler’s domestic sales for last month were less than half what they were a year earlier.

Sales fell 49 percent at General Motors (GM) and 40 percent at Ford.

Toyota and Nissan’s sales each fell at least 30 percent.

“How many ways can you say disaster?” said Aaron Bragman, an auto industry analyst with the consulting firm IHS Global Insight in Troy, Michigan. “That’s across the board. It’s not unique to one company.”

With last month’s drop, the industry’s sales have declined for 15 straight months when compared with the same month in the previous year. There hasn’t been a year-over-year increase since October 2007, when light vehicle sales rose 1 percent, Autodata Corp and Ward’s AutoInfoBank said.

The industry’s sales of 656,976 vehicles, compared with just over a million last January, translates to a seasonally adjusted annual sales rate of 9.57 million, according to Autodata. That’s the worst performance since June 1982, when the US was mired in a recession.

Huge declines in low-profit fleet sales to rental car companies made last month an exceptionally bad month, even though automakers said they were encouraged that retail sales appeared to be stabilizing after four straight months with an industrywide sales plunge of at least 30 percent.

“If you’re starting from an extremely low point, pretty much anywhere you go is up,” said Bragman, whose company has predicted annual sales for this year of 10.3 million, down from last year’s 13.2 million and 16.1 million in 2007.

But executives anticipated a treacherous beginning of the year before the market improves.

George Pipas, Ford Motor Co’s top sales analyst, wasn’t sure whether 15 months of industrywide sales declines is a record, but if it is, it won’t last long.

“I can tell you that it’s only going to last for one month,” Pipas said, predicting year-over-year declines until perhaps later in the year.

With only a small increase, sales should surpass the dismal levels seen at the end of last year, he said.

US automakers will need sales to improve if they want their turnaround plans to be successful. After receiving US$13.4 billion in federal loans to stay afloat, General Motors Corp and Chrysler LLC have said they are basing their plans on industrywide sales this year of 10.5 million and 11.1 million vehicles respectively.

But few people were expecting the automakers to start the year at such a pace. January is typically a slow sales month, and the market isn’t likely to improve until the second half of the year as economic stimulus efforts take effect and access to credit improves.

The incentives automakers have rolled out have done little to boost sales. Chrysler has been offering employee pricing, zero-percent financing and up to US$6,000 in rebates. GM said it will launch a round of zero-percent financing with the help of the US$5 billion in aid its financing arm, GMAC, received last year.

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