Auto sales hit new lows; GM's plunge 41%

A dreary economy, swooning consumer confidence and tight credit markets have combined to keep consumers out of vehicle showrooms this year.

cars biz88 224 (photo credit: Kiichiro Sato/AP)
cars biz88 224
(photo credit: Kiichiro Sato/AP)
General Motors's November US sales plunged 41 percent, while Ford's dropped 31%, dashing hopes that the industrywide drop in vehicle demand might be easing as Detroit's automakers prepare to state their second case for a federal bailout. Their overseas rivals posted abysmal results as well. Toyota's November sales tumbled 34%, and Honda's fell 32%. A dreary economy, swooning consumer confidence and tight credit markets have combined to keep consumers out of vehicle showrooms this year. On Monday, the National Bureau of Economic Research said the US had entered a recession in December 2007, much earlier than most predictions. October's seasonally adjusted annual sales rate of 10.6 million vehicles was the 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 GM, Ford, Toyota and Honda Motor Co. all posted month-over-month sales declines, pointing to a potential industrywide drop. Detroit-based General Motors Corp. reported a 44% drop in demand for cars, while light truck sales dropped 39%. Jim Farley, Ford Motor Co.'s group vice president of marketing, said he expects the industry to post continued year-over-year declines in auto sales until at least the second half of 2009. He said sales began the month at an improved rate but began skidding around mid-month, coinciding with the Detroit Three's presentation to Congress for $25 billion in loans. But Farley 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," he said. Dearborn, Michigan-based Ford said light truck sales for its namesake brand, Lincoln and Mercury were off 29% compared with November 2007, while the three brands' car sales were down 32%. Toyota Motor Corp., Japan's No. 1 automaker, said truck sales had plummeted 36%, while demand for passenger cars fell 32%, despite the automaker's extension of zero-percent financing on a dozen vehicles through the end of the month. Toward the end of the month, 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 are coming in the same day the US-based automakers were scheduled to present plans to Congress for how they expect to return to profitability. Ford, GM and Chrysler LLC will go before lawmakers this week to ask a second time for a combined $25b. federal loan to stave off bankruptcy.