Toyota sales in the United States fell more than 30 percent

Posted by admin | General Motors | Wednesday 1 October 2008 3:10 pm

Toyota, the Ford Motor Company and Chrysler each said Wednesday that their sales in the United States fell more than 30 percent in September, as volatility in the financial markets compounded what already had been a miserable year for the auto industry.

But sales were better than expected at General Motors, which reported a 16 percent decline and estimated that its market share rose to the highest level in more than three years.

“We are looking at a very fragile economy,” Emily Kolinski-Morris, Ford’s chief economist, said on a conference call with analysts and reporters. “I don’t think anyone can say where the bottom might be.”

Sales were off 34 percent at Ford, 33 percent at Chrysler and 32 percent at Toyota. Honda, which had fared much better than its rivals in the first half of the year, reported a 24 percent decline.

Car dealers have been struggling to draw customers into their showrooms. Through August, vehicle sales nationwide were down 11.2 percent.

The three Detroit automakers have suffered most as high gasoline prices decimated demand for pickup trucks and sport utility vehicles. Sales of light truck are down more than 20 percent so far this year at G.M., Ford and Chrysler.

The companies have increased discounts on slow-selling models, with limited success. G.M. offered all shoppers an “employee pricing” discount on most models throughout September.

“In a very difficult and challenging industry, our relative performance was outstanding,” G.M.’s chief sales analyst, Michael C. DiGiovanni, said.

Michael Futrell, the general manager of the Champion Chevrolet dealership in Tallahassee, Fla., said he was able to offer deals like a Chevrolet Silverado pickup truck at $6,500 below cost, yet few people were interested.

He said car shoppers were typically hesitant in the months before a presidential election, but the weak economy had made this fall much worse.

“People want to buy but they just don’t want to pull the trigger until they know who’s going to be in office and what this economy’s going to do,” Mr. Futrell said. “What the consumer doesn’t understand is that there’s probably not a better time to buy a car. The deals are out there, but I think everybody’s so skeptical that they’re trying to hold off.”

He said the first half of September was actually better than expected but that sales dried up after the extent of Wall Street’s troubles became apparent.

“It was like somebody just turned the spigot off,” he said.

Automakers hope the new models they are introducing this fall will help attract more shoppers. Chrysler is introducing a redesigned version of its pickup, the Dodge Ram, and Ford will start selling its revamped pickup, the F-series, next month. G.M. has just started production of a crossover vehicle, the Chevrolet Traverse.

In addition to the drop in September sales, the American auto industry has been hit hard by the credit crisis. And with banks tightening up their lending, any hope for a recovery in vehicle sales this year has been dashed.

The biggest problem for the industry is the difficulties prospective car buyers are having in securing loans.

In 2007, nearly 83 percent of applications for auto loans in the United States were approved, according to CNW Marketing Research of Bandon, Ore. But so far this year, the approval rate has plunged to 63 percent.

“It frankly has become a nightmare for dealers and consumers who need a vehicle,” said Art Spinella, CNW’s president. “This is the worst we have seen it since we’ve been tracking it since 1984.”

Many shoppers — some with blue-chip credit histories — are able to get loans only at high rates.

“Instead of paying 7 percent like they should pay, they might have to pay 9 or 10 percent, and they’re just passing,” said Larry Kelly, general manager of Ritchey Cadillac-Buick-Pontiac-GMC in Daytona Beach, Fla.

The squeeze is particularly severe for customers with less-than-stellar credit scores who need subprime loans at higher interest rates.

While 67 percent of those consumers were approved for loans in 2007, only 22 percent are getting them this year, according to CNW.

“The subprime market has, for all intents and purposes, dried up,” Mr. Spinella said.

Automakers have already experienced a drastic drop in sales of larger vehicles like pickups and sport utility vehicles because of gas prices that hit $4 a gallon this spring.

But Mark LaNeve, head of North American sales for General Motors, estimates that G.M. is losing 10,000 to 12,000 sales a month because of tighter lending practices.

“It’s a bigger problem than $4-a-gallon gas,” said James Press, a Chrysler vice chairman. “We have buyers coming in, but they can’t get a loan.”

One Pennsylvania auto dealer said the credit squeeze was only adding to problems caused by a weak economy that many fear could turn into a recession.

Tight credit, economic worries and high gasoline prices cut automakers’ U.S. sales once again in September, with beleaguered Ford Motor Co. reporting a 34 per cent decline from the same month last year.

It was Ford’s worst sales month this year.

General Motors Corp.’s sales drop was a less severe 16 per cent, mostly thanks to an offer of employee pricing on most of its vehicles.

Hyundai Motor Co., whose single-digit sales decline this year has looked like a success against the Detroit automakers’ slide, reported its U.S. sales fell 25 per cent.

Other automakers were set to release their results later Wednesday.

Analysts have predicted September declines of more than 20 per cent for most major automakers when compared with the same month last year.

Jim Farley, Ford’s vice-president for marketing, said economic conditions have raised uncertainty among buyers.

“Even if you have good credit, there’s a reluctance to pull the trigger on a big-ticket item,” he said.

Canadian consumers and businesses, particularly in oil-rich parts of the country, have been less affected than their American counterparts by the economic downturn.

However, the United States is vitally important for the Canadian manufacturers since most cars and trucks made in Ontario are exported to U.S. buyers. And the Canadian economy is also slowing.

The three big Detroit-based auto companies, whether in the United States or Canada, have been especially hard hit by high fuel prices, a drop-off in construction activity and rising consumer unease.

If overall U.S. industry sales drop in September, it will be the 11th straight month of year-over-year decline - the longest string of down months since 14 straight negative months ended in December 1991, according to Autodata Corp.

Dealers from many manufacturers have said their customers are having an increasingly hard time qualifying for loans to buy autos, as banks have restricted lending and several automakers’ finance arms have limited or discontinued leasing.

George Pipas, Ford’s top sales analyst, said nearly all automakers saw “extremely weak” sales in the waning days of the month as the Wall Street crisis grew.

“It was tantamount, really, to a natural disaster,” he said.

Ford sales also were hurt as buyers continued to favour small fuel-efficient cars over trucks and sport utility vehicles. Ford’s truck sales were down 39 per cent, while car sales dropped 19 per cent.

Sales increased only on the Focus small car, up five per cent; the Ontario-built Crown Victoria large sedan, up three per cent; and the Lincoln Town Car, up 69 per cent.

Sales of F-series pickup trucks, Ford’s top selling model, were down almost 42 per cent.

Ford, like its competitors, has been trying to shift its factories and model lineup from trucks and SUVs to more efficient cars and crossover vehicles.

The Dearborn-based automaker has lost $23.9 billion in the past 2 1/2 years.

General Motors Corp. has performed strongly overseas but plummeting demand for its most profitable products in the U.S. has led to losses of $57.5 billion in the past 18 months.

GM’s light truck demand fell 19 per cent in September, while car sales slid 10 per cent.

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