#us auto sales
2008 U.S. Auto Sales Are Worst Since 1992
By Michelle Krebs and Bill Visnic
U.S. auto sales continued their precipitous tumble in December, closing the books on the industry s worst year since 1992.
Five of the Big Six automakers — General Motors, Ford, Toyota, Nissan and Honda — saw sales slide another 30 percent each in December; Chrysler s plummeted 53 percent. No automaker showed higher sales December to December. The lucky ones saw mere single-digit dips.
For the full year of 2008, all of the Big Six automakers reported sales declines. In total, the industry sold 13.2 million vehicles for an 18 percent drop from 2007 s 16.1 million.
It was an unbelievable year — not one I want to repeat, said Mark LaNeve, GM s head of sales and marketing in a conference call with reporters. Hopefully, 2009 will improve from December s low point rather than deteriorate as 2008 did.
Indeed, the deterioration in auto sales throughout 2008 was nothing short of stunning. Ford s top sales analyst George Pipas notes first-quarter 2008 sales ran at a 15.6 million annual sales rate. By the second quarter, as gas prices began climbing and housing values fell, the rate dropped to 14.6 million. The third quarter — the quarter in which Lehman Brothers failed and credit froze — saw yet another 1 million unit drop in the sales rate to 13.1 million. The fourth quarter closed at a rate of 10.6 million units.
Can We See Bottom Yet?
Have we bottomed out yet? asked Ford s Pipas rhetorically. I don t know. Ford doesn t know. Bright people in Washington don t know.
In fact, many signs are discouraging. On the day the auto industry announced its dismal sales for 2008, President-Elect Obama, on his first day back in Washington, warned the economy was worsening. Economists expect growth to continue to be negative and the jobless rate — the newest numbers to be announced later this week — to continue climbing in 2009. Housing prices — a must for a recovery — remain weak.
Auto executives and analysts see no reprieve to declining sales at least in the first quarter. January and February, traditionally the lowest sales months of the year, are expected to be particularly bad for automakers this year. Edmunds.com s Toprak estimates U.S. sales in January could a miserable 550,000 vehicles. For the past decade, 1 million industry sales have been the norm for January.
Still, the most optimistic say the industry hasn t hit rock bottom yet — but it is in sight. While still extremely weak, the auto industry patient is stabilizing. Sales month to month versus year over year are stabilizing. December s Seasonally Adjusted Annual Rate (SAAR) for sales, according to Ward s Auto calculations, came in at 10.27 million vehicles. That was a slight edge upward from November s 10.14 million, though it came at a price as automakers offered the richest incentives of any December on record, according to Edmunds.com s analysis.
Record high incentives averaging $2,900 a vehicle showed the desperation of automakers, domestic and Japanese, said Jesse Toprak, Edmunds.com s executive director of industry analysis. Toyota s incentives hit $2,000 a vehicle — twice the amount it spent in December 2007.
The hefty incentives were required to rid automakers of the leftover 2008 models on their lots. Toprak noted that 40 percent of the vehicles sold in December were 2008 — not newer 2009 — models. In December 2007, only 19 percent of December sales were of leftover models.
Another sign of vehicle sales achieving a more normal equilibrium was a year-end hike in truck sales, thanks to lower gas prices, beefy incentives and snowy weather across the country.
As a result, the Ford F-Series pickup maintained its spot as the nation s best-selling vehicle for more than three decades. Its long-held sales crown had been threatened earlier in the year as industry truck sales plummeted in reaction to $4 a gallon gas — and sales of small cars surged. The Chevrolet Silverado ranked 2nd in total vehicle sales, according to Ward s Auto.
Despite the late-game moves by trucks, cars outsold trucks sales in 2008 for the first time since 2000. The Toyota Camry was the nation s best-selling car, and 3rd in overall vehicle sales, according to Ward s Auto. The Honda Accord, Toyota Corolla/Matrix, Honda Civic and Chevrolet Impala followed.
I think there is some cause for optimism as we move into 2009, especially in the second half, said Mike DiGiovanni, GM s executive director of global market analysis.
A new incoming administration has adopted a pull-out-the-stops attitude toward fixing the economy. President-Elect Obama s economic stimulus package promises to put people to work and money in their pockets. Continued low gas prices also are keeping money in consumers pockets. Actions taken last fall by Treasury Secretary Hank Paulsen should soon yield the loosening of credit.
The sooner stimulus efforts find their way to where they ll do the most good — into the hands of consumers — the sooner we ll see a turnaround in confidence levels and a return of buyers to the marketplace, said Toyota Motor Sales President Jim Lentz.
And the fact of the matter is a recession cannot last forever.
Far From Normal
Still, while the bottom may be in sight, breaking out the champagne in celebration is premature.
Edmunds.com forecasts full-year 2009 sales to total 12.3 million vehicles, still lower than 2008. We see the first half of 2009 running at an 11 million SAAR and the second half at 12 million to 13 million, he said.
Similarly, GM is sticking to the 2009 forecast it provided to Congress in its viability plan to obtain federal bridge loans. That forecast calls for a baseline of 12 million vehicle sales in 2009 with a downside of 10.5 million. DiGiovanni said GM is fine tuning its forecast for Chapter 2 of its viability plan required by March 31. But he expects little change.