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Auto Sales Plummet in January

By KIMBERLY S. JOHNSON and BREE FOWLER

posted: 294 DAYS 4 HOURS AGO

comments: 440

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DETROIT (Feb. 3) - Chrysler's U.S. vehicle sales plunged 55 percent in January, while General Motors' tumbled 49 percent and Ford's dropped 40 percent, starting 2009 at an abysmal pace for the whole auto industry as lower sales to fleet buyers like rental car companies weighed down the results.

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Toyota's sales dove 32 percent for the month, Nissan's dropped 30 percent and Honda's fell 28 percent, putting the overall industry on track for its fourth straight month in which U.S. sales plunged 30 percent or more.

But Subaru bucked the trend of declines for a second month in a row, posting an 8 percent sales increase, and Hyundai said its sales jumped 14 percent.

Hyundai credited its increase to its offer to cover a new vehicle's depreciation if customers return a car within 12 months because they are unable to make the payments.

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"This program gets to the root cause of today's economic concerns - fear of job loss," Hyundai regional general manager Peter DiPersia said in a statement.

Chrysler's sales chief, Steven Landry, told reporters earlier at a meeting with dealers that U.S. industry sales could drop as much as 35 percent in January. The annualized sales rate for the month could drop below 10 million for the first time in more than 26 years, he said.

According to Ward's AutoInfoBank, the last month in which the seasonally adjusted annual sales rate dropped below 10 million was August 1982, when it hit 9.9 million as the nation was mired in a recession.

Domestic and foreign automakers have been struggling as unemployment rises, consumer confidence weakens and many people have a tougher time getting loans. General Motors Corp. and Chrysler LLC have received $13.4 billion in federal loans to stay afloat, and they hope to get more after they submit a viability plan to the government by Feb. 17. Ford Motor Co. has said it does not plan to use government aid.

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GM said earlier this month it is planning its turnaround under the assumption the entire industry will sell 10.5 million new vehicles in the U.S. this year. Chrysler has said it's planning on 11.1 million units, and Ford last week reduced its forecast to a range between 11.5 million and 12.5 million. But few people were expecting the automakers to start 2009 at such a pace.

January is typically a slow sales month, and many automakers and analysts are expecting the market to rebound in the second half of the year as the economy and access to credit improves.

Detroit-based GM sold 128,198 light vehicles in January, while Ford's sales totaled 93,060 and Chrysler sold 62,157. Toyota Motor Corp. sold 117,287 cars and trucks.

The automakers have rolled out hefty incentive offers to boost sales. Edmunds.com estimated the average automaker incentive at $2,714 per vehicle sold in January, down 5.2 percent from December but up 12.5 percent from January 2008.

Jesse Toprak, the auto Web site's executive director of industry analysis, attributed the year-over-year increase to a greater number of lingering 2008 model year vehicles. He noted that 27 percent of all new vehicles sold this January were from the 2008 model year, up from 12 percent a year ago.

Analysts had expected high-volume fleet sales to be down sharply in January, as consumers and businesses cut back on travel in the economic downturn and rental car companies hold onto their current cars longer.

Production cuts that have idled many U.S. factories for several weeks have compounded the problem. Many fleet customers get their deliveries right after cars roll off the assembly line, so when factories suspend production, those deliveries come to a halt.

Chrysler said its January fleet sales dropped 81 percent from year-ago levels. GM said its fleet sales fell 80 percent to just over 13,000 vehicles in January, marking their lowest sales level since 1975. GM's retail sales fell 38 percent.

"We think fleet volume, especially rentals, will stabilize in the last half of the year," said Mark LaNeve, GM's vice president for North American marketing. "We're aggressively going after it."

Dearborn-based Ford said January's drop in sales of Ford, Lincoln and Mercury vehicles included a 65 percent decline in fleet sales, but Ford's retail sales, which dropped 27 percent from a year ago, stabilized over the last three months.

"What we're looking for is stabilization. You have to stop falling before you can start rising," said Emily Kolinski Morris, Ford's top economist. "Consumers are responding to favorable prices and discounts."

Not all of the major automakers posted big drops in fleet sales.

Bob Carter, Toyota division general manager, said his company's fleet sales fell roughly in line with its retail sales drop. Carter said Toyota aims to keep fleet sales at about 10 percent of total sales, and said they came in at about 9 percent in January.

Chrysler posted a 66 percent drop in car sales and a 49 percent decline in truck sales. Company officials attributed the steep decreases to shortage of affordable credit for its customers, noting that the $1.5 billion federal loan for its financing arm wasn't received until the second half of the month.

Toyota's sales of light trucks fell 35 percent on about equal declines in SUV and pickup truck demand, while its car sales dropped 29 percent. Sales of its Prius hybrid slid 29 percent.

Carter said he's optimistic consumer confidence is beginning to turn and that the credit markets are beginning to loosen, but he cautioned that the first half of 2009 will continue to be difficult for the industry, predicting that sales will not rebound until the second half of the year.

"The entire auto industry continues to find itself in the eye of this economic storm," Carter said.

Honda Motor Co.'s car sales fell 27 percent and its truck sales dropped 29 percent, but the Japanese automaker saw a 6 percent increase in sales of its Fit subcompact, and sales of the updated Acura TSX sports sedan rose 16 percent.

Ford shares rose 8 cents, or 4.3 percent, to $1.96 Tuesday, while GM shares fell 4 cents to $2.85. Toyota's U.S. shares rose $1.71, or 2.7 percent, to $65.59, and Honda's shares climbed 69 cents, or 3 percent, to $23.41.

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 26 sales days last month, one more than in January 2008.

AP Auto Writer Bree Fowler reported from New York. AP Auto Writer Dan Strumpf in New York contributed to this report.

Copyright 2009 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2009-02-03 12:26:35

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440 comments

Skidaj 06:29:05 PM Feb 04 2009

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When do you think our politicians will "cap" their slaries? When will Pelosi give up her private taxpayer paid jet? When will they start living what they're preaching? At least we willingly pay businesses with what we buy. The government MAKES us pay with no regard to "the little guy" They want to shame the CEO's into however it is they want them to act. When will our elected "leaders" be shamed into acting how we want them to act?? I'll tell you when. WHEN WE THREATEN TO VOTE THEM OUT. And not until we do that.

LeeResolution 04:32:29 PM Feb 04 2009

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asdf

DWUZZIE 04:13:27 PM Feb 04 2009

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LeeResolution 02:34:31 PM Feb 04 2009 Report This! Tariffs do nothing but harm..........The Hawley / Smoot Tarriff Act, passed after FDR first intered office.....was possibly the worst economic legislation ever passed by an American congress. The result of the tariff was that it shut down what trade there was with America, and it plunged the world into a catastrophic depression and a second world war.

DWUZZIE 03:59:08 PM Feb 04 2009

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They could park it in a row alongside the others and just let it rot also.

Courtneysarah3 03:54:22 PM Feb 04 2009

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Yes they have had a contract as they do so just about every year at the Super Bowl.But certainly bad timing on GM and the NFL's part to go ahead with it in that way at this time. Government is asking taxpayers in this economic crisis to find creative financial ways to support the automakers right now and turn around to give away a CADILLAC ESCALADE TO A WEALTHY PROFESSIONAL ATHLETE. The politically correct move by GM in that case would have been to give a car away to the choice of that players favorite charity and they could have used it to raise money by selling it,or raffling it off. And it certainly would not have to have been an $70,000 ESCALADE.

DWUZZIE 03:51:30 PM Feb 04 2009

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It's the same with corporate jets. I've seen many registered to Wells Fargo holding or Citi and other companies. They're flying charters every day and not necessarily assigned as one persons luxury transport. They ar a legitimate business tool, but less desirable with business downturn. So many thousands are being laid off in that industry also

Christi333 03:50:41 PM Feb 04 2009

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Dvdsn61 -- yeah they will find a way to get their money. After all the bashing the car companies got I was amazed today to listen to some of the news channels and hear them bash the gov for putting a cap on salaries and saying now they'll lose good poeple. What the heck.... didn't it get capped at $500,000?

Christi333 03:44:49 PM Feb 04 2009

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DWUZZIE -- I don't believe GM was suppose to advertise at the superbowl because it cost so much money... I think that was one of the millionaire senators, you know the one's who all have transplants in their states, demands when the car companies where given the loans.

DWUZZIE 03:36:51 PM Feb 04 2009

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Dvdsn61 03:28:35 PM Feb 04 2009 Report This! Dwuzzie, that's a good point if it were for advertising, but if that were the case,why the secrecy? I mean as you stated,some of his teammates may go buy one, but would a few sales justify an$85,000 advertising gimmick? -------- -------- -------- ---------- ---------- If I represented GM, I'd have grabbed the microphone and yelled "Our outstanding player gets a new Car !!! " so support your favorite game and it's sponsors and support your future enjoyment. But the panzy-azz politically correct won't allow that in this "economic climate". Good luck when KIA sponsors your next superbowl

Dvdsn61 03:36:31 PM Feb 04 2009

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Christi, You weren't alone in being irked by those parties. Capping CEOs salaries is a start, but until they do something to stop the lavish outings ,it won't do much good for their image. Those CEOs will find a way to supplement their loss in salary.

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