US carmakers report sharp sales drop
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Top US automakers reported sharp falls in their December sales, closing out the weakest year for the beleaguered US car industry in over a decade and heralding a bleak start to 2009.
REUTERS - Major automakers reported U.S. sales in December that plunged by more than a third, closing out the weakest year for the battered industry in over a decade and a half in its largest single market.
Chrysler LLC led the industry lower with sales that dropped by 53 percent in December, a month when the struggling automaker and larger rival GM fought to clinch a $17.4 billion bailout from the U.S. government.
Toyota Motor Corp, the world's largest automaker, posted a sales drop of 37 percent, followed by Honda Motor Co at 35 percent and Ford Motor Co at 32 percent. GM and Nissan Motor Co saw sales drop by 31 percent.
The plummeting sales for December had been widely expected by analysts and industry planners but seemed certain to raise concerns about the depth of the ongoing recession in the early months of 2009.
The sales figures were also the first since the U.S. Treasury extended an initial $8 billion in loans to GM and Chrysler to avoid a cash crunch that both had warned was looming.
Auto sales in Asia and Europe, which followed the U.S. market into a sharp downturn in the second half of 2008, showed signs of a deepening slowdown as well.
Sales across the industry dropped almost 16 percent in France and fell 22 percent in Japan, after a record decline of almost 50 percent in Spain last week. German data is due later this week.
Automakers across the globe are struggling to reduce stocks of unsold vehicles, and many have resorted to temporary plant closures, job cuts and extended holidays for workers. ID:nLH715189
Ford, the only Detroit automaker that has not sought emergency government funding, said it was braced for initial sales results this year to extend the weakening trend that swept through the industry for most of 2008.
"The first several months of 2009 are going to feel very much like the last few months of 2008," said Ford economist Emily Kolinski Morris. "We see little to indicate a near-term improvement in either financial market conditions or economic activity." nN05383052
On a full-year basis, U.S. auto sales were on track to end 2008 at their lowest level since 1992 at about 13.5 million vehicles, based on preliminary sales figures. That was down from 16.2 million in 2007.
That 3 million-unit plunge in sales was the steepest for the industry since 1974, when the U.S. economy was still reeling from the impact of the first oil shock.
U.S. automakers expect a continued decline in 2009 but held out hope that the pace of the losses would ease.
GM said it expected to keep its 2009 sales forecast unchanged at between 10.5 million and 12 million vehicles, the continued slump it had forecast last month in seeking a bailout from Congress.
"We're optimistic that it's a year that will at least gradually improve and not see the massive deterioration that we saw in the third and fourth quarter of 2008," GM sales chief Mark LaNeve said in a conference call with reporters and analysts. nN05407066
Shares of Ford rose almost 5 percent while GM gained 1.6 percent on Monday. Shares of both automakers have gained since late December on signs that the U.S. government was pushing ahead with a broad rescue for the industry.
DISCOUNTS CLIMB WITH INVENTORIES
As sales-adjusted inventory levels climbed in the fourth quarter, major automakers have been forced to discount more heavily in a bid to stock from dealer lots.
Auto-tracking Web site Edmunds said December auto incentive levels were the highest ever for the month. Ford cited industry data showing that the average discount on a new vehicle had risen from about $3,000 in October to about $3,600 last month.
Hyundai Motor Co, which made its mark in the U.S. market as a lower-cost alternative to Japanese brands, rolled out an unusual marketing campaign that would allow U.S. consumers to return new cars if they lose their jobs.
"In this uncertain economy, we are looking for ways to reassure shoppers that Hyundai still represents the best value in the auto industry," said John Krafcik, Hyundai Motor America's acting chief executive. nN05382780
Toyota, which has forecast its first-ever annual operating loss, said it would offer new cash-back discounts to U.S. car shoppers in the current quarter and was hopeful that the economy would begin to improve slowly in the second half.
"The sooner stimulus efforts find their way to where they'll do the most good -- and that's in the hand of the consumer -- the sooner we'll see a turnaround in confidence levels and a return of buyers," said Toyota Motor Sales President Jim Lentz.
GM and Chrysler, both struggling to shake free of the stigma of potential failure, said they would also roll out new discount offers.
GM said it would extend the low-cost financing offers with GMAC that it brought back at the end of last month after the finance company received a $6 billion federal bailout and eased lending standards.
Chrysler, which like GMAC is controlled by Cerberus Capital Management, said it would offer an additional $1,000 discount to consumers who finance vehicles through local credit unions.
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