Automakers saw another painful slide in US sales in August with consumers cautious amid a weak economy, monthly data showed Wednesday, raising the odds for a government aid plan for the industry.
Total new car sales amounted to 1.249 million units, or an adjusted annual pace of 13.72 million — down a whopping 15.5 percent from a year ago, according to research firm Autodata.
The Big Three Detroit carmakers reported hefty double-digit declines from a year ago, and Japan's Toyota and Honda saw single-digit losses, while Nissan bucked the trend with an increase in sales.
The Detroit companies are preparing to launch a campaign for assistance next week, according to industry sources. The goal is to have Congress approve at least 25 billion dollars in loans by the end of September.
“It's a bad time for the industry, even for those companies that are competitive,” said Peter Morici, economist at the University of Maryland.
“I don't expect things to improve much because (economic) conditions are slowing further … people don't have any money” for big purchases.
General Motors reported August US sales slumped 20.4 percent from a year ago to 308,817 vehicles, although it pointed out that sales were up a significant 31 percent from a month earlier.
Himanshu Patel at JP Morgan Securities said GM's sales were “notably better than the consensus” forecast for a 29 percent drop, and were “arguably aided by the employee discount program — a plan offering all consumers the discounts enjoyed by GM employees. That plan was extended to September 30.
Ford Motor Co. said its August US sales slid 26.6 percent from a year ago, citing a “weak economy” and sluggish demand for large trucks and sport utility vehicles.
Ford cited “higher demand” for fuel-efficient small cars and SUVs but this was offset by other factors.
“The impact of a weak economy and lower demand for large trucks and SUVs resulted in double-digit sales declines for Ford and the auto industry,” the company said.
“We expect the second half of 2008 will be more challenging than the first half, as weak economic conditions and the consumer credit crunch continues,” said Jim Farley, Ford group vice president.
Chrysler LLC reported a 34 percent slide in US August sales, citing “an industrywide slowdown, segment shifts and reduced fleet sales.”
The number-three US automaker, spun off last year to a private equity firm from German maker Daimler, said it sold 110,235 new cars and light trucks in the month under the Chrysler, Dodge and Jeep nameplates.
Chrysler said it was extending its promotions of up to 40 percent off normal retail price on some vehicles, and zero percent financing for some sport utility vehicles and trucks.
Foreign-based automakers did not do much better: Toyota sales fell 9.4 percent to 211,533 vehicles and Honda reported a 7.3 percent decline to 146,855. Nissan was the exception with a 13.6 percent increase to 108,493.
Morici said the industry woes are boosting the likelihood of a government aid package.
“There is a lot of political pressure” to aid the industry, Morici said.
“I think the reason Republicans and Democrats are inclined to get behind this industry is that there is a presidential election in November.”
Jessica Caldwell, analyst at the research firm Edmunds.com, said a bailout plan is becoming more likely.
“A lot of the manufacturers are in trouble,” she said. “The gasoline crisis came on us faster than we expected, and the automakers are stuck with vehicles that don't resonate with consumers.”
Caldwell said the automakers are retooling but that the long development time makes it hard to get new cars on the market now. In the meantime, the hefty use of discounts, cut-rate financing and other incentives is escalating.
“They don't want to continue this — 40 percent off is not the way they want to do business.”
Still, she said some companies can take some comfort in the small gains from July in some segments of the market, aided by an easing of fuel costs and aggressive discounts.
“Everyone has been in a wait-and-see pattern, and now the automakers are hitting them with enticing incentives,” she said.
“It seemed some people were waiting to buy a car, and when there was a promotion they decided to buy the car they wanted.”
