Consumers holding out; dismal data likely
With the distracting collapse of powerful Wall Street institutions this month -- the latest crisis in a growing economic calamity that has ensnared the housing, credit and energy markets -- it's safe to say that consumers weren't much in the mood to buy a new car or truck in September.
Automakers report their monthly sales results on Wednesday, and dismal results are expected.
The consumer Web site Edmunds.com is predicting a 20% decline in auto sales during the month, compared with the same month a year ago, as many consumers continue holding back on purchases and others find it increasingly difficult to get credit as troubled banks tighten their lending standards.
"Our volume is probably being impacted by a good 20% on credit availability issues," Mike Jackson, the CEO of AutoNation, the nation's largest chain of car dealerships, told the Free Press in an interview mid-month. "The standards are simply being raised to a level that they're being told 'No' when in normal times they would have been told 'Yes.' "
General Motors Corp., Ford Motor Co. and Chrysler LLC are expected to bear the brunt of the declines. Edmunds expects sales to be off 24% at GM, 25% at Ford and 37% at Chrysler.
The major foreign automakers are expecting to post declines, too.
Edmunds is forecasting a decline of 18% for Toyota Motor Corp., 12% at Nissan Motor Co. and 6% at Honda Motor Co. But because those declines are better than the industry performance, that would leave all three foreign automakers picking up critical U.S. market share at the expense of Detroit's automakers.
In all, the brokerage Goldman Sachs is forecasting a seasonally adjusted annual selling rate of just 13 million cars and trucks in September "in the midst of market turmoil."
The seasonally adjusted annual selling rate, or SAAR, indicates what sales would total for the whole year if demand remained constant over 12 months, adjusting for seasonal factors. It's an easy reference to compare how the market is performing month to month.
For the past decade or so, the SAAR usually has ranged between 14 million and 17 million vehicles. Since December, the SAAR has been in a free-fall -- until August, when it seemed to have finally bottomed out, hitting 13.72 million vehicles.
If September's SAAR hits 13, however, it could be a sign that the market hasn't quite hit the bottom yet.
Worse yet, Sachs analyst Patrick Archambault noted that automakers have been ramping up incentives to deliver those meager sales results, a sign that natural demand for cars and trucks remains extraordinarily weak.