General Motors’ October U.S. sales plunged 45 percent, and Ford’s and Chrysler’s weren’t far behind, as low consumer confidence and tight credit combined to bring the industry’s sales to an “unsustainably weak level” that is the worst in 25 years.
Automakers sold 838,156 vehicles in October, 32 percent fewer than the same month last year and the worst performance since January 1991, according to Autodata Corp. and Ward’s AutoInfoBank. The seasonally adjusted annual sales rate of 10.6 million vehicles was the lowest since February 1983.
“It’s really an unsustainably weak level for all manufacturers,” said Mike DiGiovanni, GM’s executive director of global market and industry analysis. “This is clearly a severe, severe recession for the U.S. automotive industry and something we really can’t sustain.”
The annual sales rate in October 2007 was 16.1 million.
Chrysler’s sales tumbled 35 percent and Ford’s dropped 30 percent. Toyota’s sales fell 23 percent despite its zero-percent financing offer, and Nissan and Honda posted 33 percent and 25 percent declines, respectively.
Overall, General Motors Corp. sold 168,719 vehicles in October, while Ford Motor Co., including its Volvo brand, sold 132,278 light vehicles and Chrysler LLC’s sales totaled 94,530 units.
If GM’s sales were adjusted for population growth, October would be the worst month of the post-World War II era, DiGiovanni said.
“Clearly we’re in a very dire situation,” he said. Detroit-based GM said its light truck sales tumbled 51 percent compared with the same month last year, while demand for passenger cars fell 34 percent.
Despite the steep drop, GM’s total was enough to keep it ahead of Toyota Motor Corp. for the No. 1 U.S. sales spot. Toyota, which rolled out an offer of zero-percent financing during the month, sold 152,101 vehicles. The Japanese company’s light truck sales fell 34 percent, while car sales dropped 15 percent.
Honda Motor Co.’s sales fell to 85,864 vehicles as truck sales fell 29 percent. But sales of cars from its Acura luxury division rose 6 percent.
Nissan Motor Co. sold 56,945 vehicles, and its truck sales dropped 52 percent.
Ford officials said on a conference call with reporters and industry analysts that as bad as October sales were, it’s probably not the bottom.
Emily Kolinski Morris, the Dearborn-based company’s senior economist, said that because automobiles are more durable, people can wait without buying a new vehicle until they feel more confident in the economy.
“The answer to when we will start to come out of that trough lies in when the economy comes out of that trough,” Kolinski Morris said.
Ford likely will announce car and crossover vehicle production cuts when it announces its third-quarter earnings on Friday, said George Pipas, Ford’s top sales analyst. Truck production cuts earlier in the year have kept inventories low, but car and crossover inventories need to be brought into line, he said.
Sales of the company’s F-Series pickup trucks, traditionally its top seller, fell 16 percent in October, better than Ford’s light trucks as a whole, which dropped more than 30 percent. The company began selling a new version of the pickup last month and has announced plans to add 1,000 workers at its Dearborn Truck Plant in January to handle what it expects will be increased demand.
Even Ford’s Focus small car, which had experienced sales increases during the summer, saw its sales drop 18 percent.
Pipas said that even cars that once were selling well aren’t selling in a U.S. market that last month shrank to an annual sales rate of about 11 million vehicles.
“In an 11 million industry, you’re not going to see very many products for very many manufacturers post year-on-year sales increases.”
Jim Farley, Ford’s group vice president of marketing, said it’s likely auto companies will start their year-end sales promotions early to try to drum up business, although he would not say what steps Ford would take.
GM said it will start its annual “Red Tag” sale Tuesday, with lower pricing and customer cash back on most of its new models. The sale typically begins later in the year.
Chrysler said it would continue incentive programs introduced in November that include cash rebates of up to $6,000 and discounted financing on remaining 2008 model year vehicles.
The Auburn Hills-based company is also offering lease loyalty allowances of up to $750 for purchases made by returning lease customers, along with bonus cash of up to $2,000 on some 2008 vehicles for customers who lease through independent financial institutions.
After reeling from a 32 percent drop in September sales, Toyota launched zero-percent financing on almost all of its models, prompting analysts to predict that it could post better-than-average October sales and potentially surpass GM for the first time as the U.S. sales leader.
But, like at Ford, the vast majority of Toyota models still posted double-digit declines. Notable exceptions included sales of the Corolla, which rose 6.1 percent, and the Sequoia sport utility vehicle, which posted a 21 percent gain.
Toyota Division General Manager Bob Carter said the financing offer, which had been set to expire on Monday but will now be extended for another month, gave October’s sales a needed boost.
“This managed to breathe some life into an otherwise lackluster month,” Carter said.
Meanwhile, GM’s financing arm, GMAC Financial Services, said it was tightening its lending standards to require a credit score of at least 700, potentially shutting out some buyers.
Mark LaNeve, GM’s vice president for North American sales, said steep cutbacks in leasing and lack of available credit accounted for half of GM’s year-over-year sales decline.
“There really needs to be actions focused on the consumer and available credit,” DiGiovanni said.
Analysts said GM’s employee pricing incentives in September likely pulled in buyers who would have waited to purchase cars, further reducing October sales.
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 23 sales days last month, two less than in October 2007.