Wednesday, December 31, 2008

U.S. auto sales post sharp decline Chrysler numbers down 53% in Dec.

From staff and wire reports • January 6, 2009


Unsold Compasses and Grand Cherokees sit at a Chrysler/Jeep dealership in the west Denver suburb of Golden, Colo., recently. Chrysler said Monday that its December U.S. sales plunged 53 percent. The company blamed the tough economy.

Chrysler LLC's December U.S. sales plunged by more than half, and it sold 30 percent fewer vehicles in 2008, dwarfing the steep declines at the other major automakers as consumers remained uncertain about the economy and their jobs.

Chrysler said Monday its December sales dropped 53 percent because of the recession and fewer fleet sales, while Toyota Motor Corp. reported a 37 percent slide and Honda Motor Co. said its sales tumbled 35 percent.

Ford Motor Co.'s U.S. sales fell 32 percent in December. General Motors Corp. and Nissan Motor Co. both posted 31 percent declines.

Ford's sales for 2008 fell 21 percent from a year earlier, keeping the Dearborn automaker in third place in the U.S. auto sales race, falling behind Toyota for the second straight year.

Toyota's 2008 sales fell 16 percent to 2.22 million, compared with Ford's 1.98 million. Detroit-based GM's 2008 sales totaled 2.95 million, down 23 percent from the year before. Honda's 2008 sales fell 8 percent.

The auto Web site predicted sales for the full year will total just over 13 million, down 18 percent from 2007 and the lowest level since 1992. Final industrywide results were expected later Monday.

Noel Daniels of the Gray-Daniels chain of car dealerships in Mississippi said the first half of 2008 "was great for us."

"Thank God for the first six months, because the last six months were as challenging" as any Daniels said he can remember.

Gray-Daniels closed Yazoo Motor Co. in December and will focus its energy on its Jackson-area dealerships. Daniels said sales in the last two weeks of December at those dealerships were encouraging, as even customers with less-than-ideal credit were able to secure financing.

Daniels says he's optimistic 2009 will be better for the industry than 2008, adding credit should be more readily available.

Paul Moak, who sells a number of brands in metro Jackson, said his dealerships saw mixed results in 2008. There were slight drops in sales of his Volvo and GM vehicles as well as used cars, but sales of Subarus and Hondas held steady from 2007, he said.

"Every year is different. Each year has its own challenges," he said.

Moak and Daniels agree that a newly elected president and members of Congress could bring about at least some economic recovery. Moak added gas price fluctuations throughout the year will influence greatly the number of cars sold and what types of vehicles people will want to buy.

Despite lower gas prices in recent months, Daniels said demand for more fuel-efficient vehicles will remain strong and will be a major focus of automakers' production plans.

Ford said it sold 138,458 light vehicles in December, down from 204,787 in the same month in 2007. The automaker doesn't see much hope for improvement in early 2009, but predicted a small uptick later in the year.

"We expect the first few months of 2009 to feel much like last three months of 2008," Emily Kolinski Morris, Ford's senior economist, said during a conference call with reporters and industry analysts.

GM sold 220,030 light vehicles in December compared with 319,837 a year earlier. The recent month's results were boosted by heavy sales incentives, including financing offers announced near the end of the month after the Treasury Department said it would give $5 billion in federal aid to GM's ailing financing arm, GMAC LLC.

Subaru of America Inc. said its U.S. sales crept higher in 2008, making the Japanese company likely to be the only major automaker with a yearly sales increase. Subaru's U.S. sales rose by 0.3 percent to 187,699 vehicles from 187,208 in 2007, as consumers snapped up its top-selling Forester and Impreza.

Chrysler's December sales totaled 89,813 vehicles, compared with 191,423 in the year-ago month. Despite the plunge, the recent month's sales represented a 5 percent increase over November levels. the Auburn Hills, Mich., carmaker said the December drop included a 63 percent decrease in fleet sales.

Aaron Bragman, automotive marketing research analyst for IHS Global Insight in Troy, Mich., said large incentives such as zero-percent financing and rebates will continue well into 2009 as automakers try everything they can to boost sales.

Full-size truck incentives ran from $7,000 to $8,000 in December.

"You look in the paper and the deals on brand new GM pickups are astonishing," Bragman said. "The discount that you get buys a heck of a lot of gasoline."

Hyundai Motor America is trying to woo buyers by promising to let them return cars free for up to a year if they lose their jobs and can't make the payments.

The "Hyundai Assurance Program" applies to customers stricken by misfortune outside of their control, such as losing their job, becoming disabled or losing their driver's license for medical reasons. It covers depreciation up to $7,500.

Similar bold moves might be necessary throughout the year. Global Insight predicts U.S. sales will drop from 13 million in 2008 to 10.3 million this year as the economy continues to sputter.

While that may bring deals for consumers, it's bad news for automakers. GM and Chrysler were forced to go to the government for loans to hold off bankruptcy, and Ford says it may need government money if sales don't recover in 2009.

But Bragman said the sales drops are not unique to the U.S.-based automakers and encompass the entire domestic market.

Toyota said it sold 141,949 vehicles in December, down from 224,399 a year earlier. Sales of the Prius hybrid dropped 45 percent as gas prices fell from their record highs in July. Toyota is scheduled to unveil an updated Prius at the North American International Auto Show in Detroit next week.

Toyota has retooled a plant it is building in north Mississippi to manufacture the Prius. It initially announced it would produce the Highlander SUVs. The Blue Springs plant was slated to go online in 2010. Toyota announced last month it is postponing the opening indefinitely.

Jim Lentz, president of Toyota Motor Sales USA, said he was optimistic hybrid sales would rebound.

"We're going to see fuel prices creep up a bit," he said. "I think the overall greening of America is going to see an increase in hybrid (sales) as well."


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