Auto sales crash and burn
Posted
Oct 01 2008, 06:34 PM
by
Anthony Mirhaydari
Rating:
September's auto sales were breathtakingly dismal: seasonally adjusted annual sales for domestically produced vehicles came in at 9.4 million for the month, down from 10.3 million previously and below the consensus estimate of 10.1 million.
A witch's brew of tighter credit availability and lack of lease financing has combined with all the pressures you're already familiar with: rising unemployment, declining asset values, dismal consumer confidence, high gas prices, etc. This is a perfect example of how the still unfolding credit crunch affects each and every one of us.
What's more, the monthly sales decline was widespread: Nissan down 37%, Ford down 35%, Chrysler down 33%, Toyota down 32%, Hyundai down 25%, Honda down 24%, GM down 16%, and VW down 9%.
Within these figures, we are seeing a continued mix shift away from trucks and SUVs towards smaller passenger cars. Toyota saw sales if its full-size Tundra pickup fall nearly 60% while GM's result was bolstered by sales of its popular Malibu mid-size sedan. Chrysler's truck sales were down 34%, while car sales fell 29%.
According to CNW Marketing Research, showroom traffic in the last 10 days of the month fell by 50% compared to last year. This comes even as fresh incentives and model-year clearances are in full swing. To make matters worse, for those that do venture down to the showroom, loan approvals are down: CNW reports that in 2007, almost 83% of applications were approved compared to just 63% now. For those infamous subprime borrowers, approval rates have fallen from 67% to 22%.
For all the dark news, there is some light. President Bush just signed a $25 billion bailout low-interest loan program for the domestic automakers to help develop the fuel-efficient vehicles that consumers want. Automakers, meanwhile, are preparing for a number of new vehicle launches, including the new Ford F-150 pickup and the Chevy Cruze, which was unveiled today in Paris.
Still, as Merrill Lynch economist David Rosenberg pointed out in a note to clients earlier this week, the consumer confidence report from the Conference Board noted that only 1.5% of those surveyed intended to buy a new car within the next six months -- an all-time low. Ominously, this measure was taken before the turmoil of the last two weeks.
Image credit: Wikimedia Commons
(Disclosure: I don’t control a position in any of the companies mentioned)
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