Auto sales. Still looking for the bottom

[Byteme]

Auto sales continue to decline, indicating the market still hasn't bottomed.


DETROIT (AP) -- Major automakers' U.S. sales continued their deep slump in February, putting the industry on track for its worst sales month in more than 27 years as huge rebates and low-interest financing failed to spur fearful consumers to make a major purchase.


AP - A car salesman speaks with a customer at the Apple Chevrolet dealership in Orland Park, Ill., Saturday, Feb. ...
General Motors' sales tumbled 53 percent from a year earlier, while Ford's U.S. sales fell 48 percent. Toyota's sales fell 40 percent, and the other major Japanese automakers were only slightly better.

The slide casts further doubt on the financial viability of GM and Chrysler, which planned to report its sales later Tuesday. They need to sell cars and generate critical cash to supplement the $17.4 billion in government loans that are keeping them in business.

Automakers and analysts have been predicting sales will rebound in the second half of this year, but they are becoming less certain. Massive layoffs, the stock market decline and sliding home values are prompting people to hold on to their cars longer, while those who are buying are more often opting for a used car or truck.

Emily Kolinski Morris, Ford Motor Co.'s top economist, said retail sales to individuals had been stable for four months but dropped in February, indicating that last month may not be the bottom for auto sales.

The bottom, she told reporters and industry analysts, can't be predicted. But she said Ford's forecast still calls for a modest second-half recovery as economic stimulus measures takes hold.

Industry analysts say when all the numbers are tallied, February sales could be worse than January's total of 656,976 light vehicles. That was the lowest monthly total since the industry sold 656,310 vehicles in December 1981, according to Autodata Corp. and Ward's AutoInfoBank.

The trough is likely even though automakers spent more on rebates, low-interest financing and other incentives in an effort to bring out buyers. But despite the fantastic deals, sales continued to slump.

"If it wasn't for the generous level of incentives now, we probably would be seeing even lower sales, if you can believe it," said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com. "It seems it can't get lower, but it could."

Ford, which hasn't taken any federal assistance, is preparing for sales to remain depressed. The Dearborn company said it plans to produce 425,000 vehicles in the second quarter, down 38 percent from the 685,000 it made in last year's April-June period.

Detroit-based General Motors Corp. said it expects to make 550,000 vehicles in the second quarter, a decline of about 34 percent from year-ago levels.

Toprak said there's little automakers can do to spur sales.

"You can spend money on marketing or incentives. That's all you can do," he said. "Neither is having a big impact on sales. That tells us it's really consumer confidence and the general negative state of the economy overall causing consumers to postpone making purchase decisions."

Industrywide, the average incentive per vehicle last month rose 8 percent from January to $2,914 per vehicle sold, Edmunds said. Incentives climbed to an average of 20 percent of the sticker price of a new car, and they topped more than $10,000 on some vehicles.

Hyundai Motor Co.'s creative "Assurance" program helped it buck the trend of double-digit sales declines with a 2 percent drop in U.S. sales last month. The South Korean company's program allows buyers to return a vehicle within a year if they can't make the payments due to a misfortune such as job loss or disability.

But more people opted for a used car instead, indicating that those who need to buy a vehicle are spending less. Edmunds said its data show that 27 percent of people who intended to buy a new car switched to used at the dealership in February.

There is hope for a rebound, however. Rising used car prices are an indication that new car sales may be near the bottom, because more people will opt for new cars when they see they won't save as much by buying a used vehicle.

Ken Czubay, Ford's vice president of U.S. sales and marketing, said higher values also make dealers more likely to take trade-ins on new cars, which could move the market to "a more natural balance between new and used."

Ford will continue its strategy of reducing low-profit fleet sales and not relying on large incentives to sell vehicles, Czubay said, protecting the company's trade-in values.

"We are zigging while some of our competitors are zagging in the incentive world," he said.

The sales slump hit Ford at both ends of its model lineup. Sales of its F-Series truck, traditionally the best-selling vehicle in the U.S., fell 55 percent, while sales of the Focus small car dropped 39 percent.

Honda Motor Co.'s sales dropped 38 percent and Nissan Motor Co.'s fell 37 percent.

Demand remained strong for Honda's Fit subcompact, whose sales dropped 2 percent, but sales of its top-selling Accord sedan fell 42 percent.

Meanwhile, Subaru of America Inc.'s U.S. sales edged up 1 percent in February as sales of its top-selling Forester model doubled. Motor Trend magazine named the Forester its sport utility vehicle of the year in the fall.

The Associated Press reports unadjusted auto sales figures, calculating the percentage change in the total number of light vehicles sold in one month compared with the same month a year earlier. Some automakers report percentages adjusted for sales days. There were 24 sales days last month, one fewer than in February 2008.

[TBR]

Quite frankly, I am shocked that anyone would buy a new car with the economy the way it is. Though I suppose it is a good time to get a really good deal.

[Byteme]

Quite frankly, I am shocked that anyone would buy a new car with the economy the way it is. Though I suppose it is a good time to get a really good deal.

If one needed to replace their car, had the money to buy this would be a good time to buy one.  Unemployment's what?  8%?    That means 92% of the work force is still employed.   

I'm seriously thinking of buying my son a new economical car for college.  New car prices are good and prices for good uesd cars are up.  This just might be the time to do it.

[Payman]

If one needed to replace their car, had the money to buy this would be a good time to buy one.  Unemployment's what?  8%?    That means 92% of the work force is still employed.  

I'm seriously thinking of buying my son a new economical car for college.  New car prices are good and prices for good uesd cars are up.  This just might be the time to do it.

They're offering $10,000 cash back on new Chrysler 300 3.5 V6's here, and you can get a Grand Caravan for $17,995!

[MaxPower]

Quite frankly, I am shocked that anyone would buy a new car with the economy the way it is. Though I suppose it is a good time to get a really good deal.

If one needed to replace their car, had the money to buy this would be a good time to buy one.  Unemployment's what?  8%?    That means 92% of the work force is still employed.  

Exactly.  Just because other people don't have a job or the money to buy a car doesn't mean you can't buy a car.  I like reminding people that 8% unemployment means 92% of people have jobs, too.

[Byteme]

They're offering $10,000 cash back on new Chrysler 300 3.5 V6's here, and you can get a Grand Caravan for $17,995!

I'm thinking more along the lines of a Mazda 3 or Focus, something like that.

I'm shocked at used car prices.  I just checked NADA, the 99 Century is valued at $5300 if sold private retail.  We paid $5300 for it 2 years ago and since then have put in a new AC blower fan, new struts, brakes, tires, replaced the problematic intake manifold gasket with a better one (leaking intake manifold gaskets were a weak spot on this car). 

[Onslaught]

Exactly.  Just because other people don't have a job or the money to buy a car doesn't mean you can't buy a car.  I like reminding people that 8% unemployment means 92% of people have jobs, too.

What % of those 92% jobs are secure? Every person I know is worried about their job. From a very wide variety of careers. The only one who's not is in the medical field.

[TBR]

What % of those 92% jobs are secure? Every person I know is worried about their job. From a very wide variety of careers. The only one who's not is in the medical field.

Exactly. While the vast majority of people are still gainfully employed, it doesn't seem like a good time to buy when pretty much every company out there is downsizing and when any investments have plummeted.

[the Teuton]

Even with great customer service, I am surprised how well Hyundai and Subaru are doing right now.

[Byteme]

Exactly. While the vast majority of people are still gainfully employed, it doesn't seem like a good time to buy when pretty much every company out there is downsizing and when any investments have plummeted.

At least 9 million people are expected to buy new cars this year. 

[MaxPower]

What % of those 92% jobs are secure? Every person I know is worried about their job. From a very wide variety of careers. The only one who's not is in the medical field.

I knew I should have conditioned my post more specifically.  Do you really think that all 92% of the employed people in this country could lose their job tomorrow?  I'm sure there are plenty of people who are certain that they will go to work tomorrow.  And that's who I'm talking about.  If I'm not going to lose my job and all my financial ducks are in a row, then there's no reason I shouldn't buy a new car if I want or need one.  I shouldn't hold back just because there is 8% unemployment in the country. 

Exactly. While the vast majority of people are still gainfully employed, it doesn't seem like a good time to buy when pretty much every company out there is downsizing and when any investments have plummeted.

Why not?  I still fail to see why other people losing their jobs has any effect on you buying yourself a car.  Unless you're about to lose your job, but you'd be worried about that or know it so you wouldn't buy yourself a car anyway.

[TBR]

I knew I should have conditioned my post more specifically.  Do you really think that all 92% of the employed people in this country could lose their job tomorrow?  I'm sure there are plenty of people who are certain that they will go to work tomorrow.  And that's who I'm talking about.  If I'm not going to lose my job and all my financial ducks are in a row, then there's no reason I shouldn't buy a new car if I want or need one.  I shouldn't hold back just because there is 8% unemployment in the country. 

Why not?  I still fail to see why other people losing their jobs has any effect on you buying yourself a car.  Unless you're about to lose your job, but you'd be worried about that or know it so you wouldn't buy yourself a car anyway.

A car is, for most people, a long term financial commitment, this is not a good time to make such a thing.

I wouldn't buy a house in this economy either.

[MrH]

A car is, for most people, a long term financial commitment, this is not a good time to make such a thing.

I wouldn't buy a house in this economy either.

I totally would.  Houses are dirt cheap now.  There's some real steals out there on the market.

[MaxPower]

A car is, for most people, a long term financial commitment, this is not a good time to make such a thing.

I wouldn't buy a house in this economy either.

If you can afford it, why not?  Because 8% of the population doesn't have a job and the economy isn't great?  That's terrible reasoning. 

[TBR]

If you can afford it, why not?  Because 8% of the population doesn't have a job and the economy isn't great?  That's terrible reasoning. 

Because there is no way to know if you will continue to be able to afford it.

Though, on second thought, a new car is definitely different from a house, in that a new car is a luxury. A period of deep recession isn't a good time to spend a significant amount of money on a luxury.

[MrH]

Because there is no way to know if you will continue to be able to afford it.

Though, on second thought, a new car is definitely different from a house, in that a new car is a luxury. A period of deep recession isn't a good time to spend a significant amount of money on a luxury.

If your job is secure, WHO CARES?

You just keep repeating yourself, and you're not answering Max Power.

[2o6]

Because there is no way to know if you will continue to be able to afford it.

Though, on second thought, a new car is definitely different from a house, in that a new car is a luxury. A period of deep recession isn't a good time to spend a significant amount of money on a luxury.

If all people are as decrepit financially as you say, then the entire economy would shrivel up and die.

[dazzleman]

I'm with TBR on this one.  Psychology is a big factor in purchases.  Many people are also waking up and realizing that they were financially overextended, and aren't in a position to make a major purchase without building up some savings.  In addition, many people who have their jobs fear losing them, and fear their ability to get another job in this market.

I have plenty of money, and could live for a while without working if I had to, but I wouldn't buy a new car in this economy unless I really needed one.

Keep in mind too that a new car, as opposed to a used one, is very discretionary with respect to timing.  The sort of people who buy news cars don't run their cars into the ground, and can easily postpone the purchase for a few years.

[Payman]

The #1 nameplate in sales in Canada for February is...

... Chrysler. 

Thanks to Grand Caravans that are cheaper than Civics, 300's that are cheaper than Accords, massive discounts on pickups and SUV's, and Calibers going for $12,000.

No discounts, not even one fucking cent, on Challengers though. 

[Payman]

I'm with TBR on this one.  Psychology is a big factor in purchases.  Many people are also waking up and realizing that they were financially overextended, and aren't in a position to make a major purchase without building up some savings.  In addition, many people who have their jobs fear losing them, and fear their ability to get another job in this market.

U have plenty of money, and could live for a while without working if I had to, but I wouldn't buy a new car in this economy unless I really needed one.

Keep in mind too that a new car, as opposed to a used one, is very discretionary with respect to timing.  The sort of people who buy news cars don't run their cars into the ground, and can easily postpone the purchase for a few years.

I bought my LAST new car 6 years ago. I have 3 vehicles, zero car loans.

[Onslaught]

If you have the money to get a new car then you should. It would be a good time to do so.
But, I think many people aren't able to do that these days.

I've got a job. I should still have it a year from now unless we go under. I wouldn't even think of buying a car right now however.

[Byteme]

If you have the money to get a new car then you should. It would be a good time to do so.
But, I think many people aren't able to do that these days.

I've got a job. I should still have it a year from now unless we go under. I wouldn't even think of buying a car right now however.

Exactly, everybody's situation is different. 

My position is about as secure as one can be.  We have more work than we can handle and the boss wisely kept the staff count low in the good times.  I have no qualms about writing a check for a new car today.

[omicron]

The only brands to post a volume increase here were Audi, Dodge, Hyundai, and Mercedes-Benz.

Whatever Hyundai is doing, it's doing it well on a global scale. They'll be in a fantastic position in two or three years time.

[GoCougs]

Exactly, everybody's situation is different. 

My position is about as secure as one can be.  We have more work than we can handle and the boss wisely kept the staff count low in the good times.  I have no qualms about writing a check for a new car today.

Cool - I love high-roller talk.

The reality of the new car market getting decimated like this is that most car purchases are financed, and those who buy new cars could be well served buy keeping what they've got, or buying used.

In short, many who buy new neither need nor can afford it.

[Byteme]

Cool - I love high-roller talk.

The reality of the new car market getting decimated like this is that most car purchases are financed, and those who buy new cars could be well served buy keeping what they've got, or buying used.

In short, many who buy new neither need nor can afford it.

Thanks for your input.

[93JC]

The #1 nameplate in sales in Canada for February is...

... Chrysler. 

HA! I had to check, just to make sure you were telling the truth. What do you know, it's true!

And Ford's right behind them. GM has taken a huge nosedive, sales down almost 60%. Honda is also in the shitter, down over 40%.

Hyundai sales on the other hand are up almost 30%; Hyundai will most likely overtake Honda as the 5th biggest in Canada this year.

Of note: only 36 Saabs were sold in the entire country last month. Ouch...

[hotrodalex]

I can buy new things because I save up and then buy it with cash. It's a great strategy, but I know not everyone can do it.

[Soup DeVille]

I can buy new things because I save up and then buy it with cash. It's a great strategy, but I know not everyone can do it.

Yes, they can. They just can't do it today

[hotrodalex]

Yes, they can. They just can't do it today

True.

But another reason that I can is because I'm single and budget so that I spend less on other entertainment things and more on cars.

[dazzleman]

Fear of job loss isn't the only issue.  Many people became so overextended with debt that they can't make it financially even when they're fully emloyed.  I know a few people in that situation.