Auto Makers Report Sharply Lower November Sales
U.S. light vehicle sales at General Motors and Chrysler plunged more than 40 percent in November, while Ford's sales dropped 31 percent, battered by an economic storm that has sent consumer demand for new vehicles to lows not seen in decades.
GM's sales fell 41 percent, while Chrysler's dropped 47 percent.
Their overseas rivals posted abysmal results Tuesday as well.
Toyota's November U.S. sales tumbled 34 percent, while Nissan's dropped 42 percent and Honda's fell 32 percent.
Like retailers of other big ticket items, automakers have taken a beating in recent months as worries about the economy and unemployment have prompted consumers to slash spending.
At the same time, some people afraid that they won't qualify for credit or that it will be too costly have put purchases on hold.
On Monday, the National Bureau of Economic Research said the U.S. entered a recession in December 2007, much earlier than most predictions.
October's seasonally adjusted annual sales rate of 10.6 million vehicles was worst in more than 25 years and far below the rate of 16 million a year earlier, according to Autodata Corp.
Many analysts had expected November sales to come in slightly better, noting that aggressive incentive spending and the plunge in gasoline prices may have put a floor under sales.
But all the major automakers posted month-over-month sales declines, pointing to a likely industrywide drop.
Chrysler LLC said its November sales decline included a 59 percent decrease in demand for cars and a 42 percent decline in truck sales.
The Auburn Hills, Mich.-based automaker said the drops were partially a result of a 63 percent decline in fleet sales.
Excluding such sales, Chrysler said its November sales fell 36 percent.
General Motors reported a 44 percent drop in demand for cars, while light truck sales dropped 39 percent.
Mike DiGiovanni, GM's executive director of global market analysis, blamed the Detroit automaker's sharp sales decline on the global economic crisis and the credit squeeze.
"What we are facing is not a General Motors problem; what we are facing is an industry problem," DiGiovanni said in a conference call.
"We are seeing further deterioration in the industry into November." DiGiovanni said the U.S. auto industry was in a worse state of recession than the broader economy, "and some might say bordering on a depression."
Jim Farley, Ford group vice president of marketing, said he expects the industry to post continued year-over-year sales declines until at least the second half of 2009.
"We could see some strengthening in the second half of next year, or at least some stabilization, albeit at a much lower level," Farley said in a conference call with analysts and reporters.
Farley said sales started the month at an improved rate but began skidding around mid-November, coinciding with the Detroit Three's presentation to Congress for $25 billion in loans.
But he cautioned that numerous factors worked together to hobble sales.
"The talk of the bailouts and the bankruptcies and all the uncertainty and job loss has obviously done little to bolster consumer confidence," Farley said.
Mark LaNeve, GM's vice president of North American sales, also acknowledged that attention on the proposed auto industry bailout likely had a negative affect on sales, though he said it was difficult to quantify.
Dearborn, Mich.-based Ford said light truck sales for its namesake brand, Lincoln and Mercury were off 29 percent compared with November 2007, while the three brands' car sales were down 32 percent.
But Ford said its market share grew in November, helped by a recovery in its pickup truck segment and demand for the Ford Fusion sedan.
Sales of Ford's top selling F-Series pickups dropped 19 percent, significantly less than most of the automaker's other models, while sales of the Fusion fell 27 percent.
George Pipas, the automaker's top sales analyst, attributed that improvement in part to the sharp decline in gasoline prices and added the company will increase the proportion of its truck production early next year.
"In effect, right now we need more trucks and we need fewer cars and crossovers," Pipas said.
Toyota Motor Corp., Japan's No. 1 automaker, said truck sales plummeted 36 percent, while demand for passenger cars fell 32 percent, despite the automaker's extension of zero-percent financing on a dozen vehicles through the end of the month.
Toyota said Tuesday that it would extend the zero percent financing offer into December, although it will be up to regional dealers to promote the deals.
Nationally, the company said it will focus its advertising on new models, such as the Venza crossover.
Toyota officials said they're bullish on the company's sales in the mid- and long-term.
While they're expecting short-term sales to be down, the introduction of the Venza and a new Prius model may boost sales in early 2009.
"While we're getting our fair share of the industry's sales, we're feeling the effects," said Brian Smith, vice president of Lexus sales and dealer development.
"Quite frankly we're interested in anything that improves consumer confidence in the industry." Toward the end of November, Ford also announced offers of employee pricing, zero-percent financing and cash incentives on a variety of its vehicles in a move to offset one of the worst sales declines in the industry's history.
Automakers' sales reports came the same day the U.S.-based automakers presented plans to Congress explaining how they expect to cut costs and return to profitability if they get government money.
Ford, GM and Chrysler will go before lawmakers this week to ask a second time for loans to stave off bankruptcy.
Concessions are also expected from the United Auto Workers Union.
UAW leaders from across the U.S. planned to hold an emergency meeting in Detroit on Wednesday to discuss concessions the union could make to help the companies get loans.
GM shares gained 26 cents, or 5.7 percent, to close at $4.85.
Ford shares rose 15 cents, or 5.9 percent, to $2.70, while Toyota's U.S. shares rose $3.39, or 5.8 percent, to $61.95.
Nissan Motor Co.'s U.S. shares rose 62 cents, or 10 percent, to $6.70 and Honda Motor Co.'s U.S. shares gained 65 cents, or 3.3 percent, to $20.59.
The Associated Press reports unadjusted auto sales figures, calculating the percentage change in the total number of vehicles sold in one month compared with the same month a year earlier.
Some automakers report percentages adjusted for sales days. There were 25 sales days last month, the same as in November 2007.