Passenger Car Back Amid Bleak Auto Sales

For the first time since 2000, passenger-car sales exceed truck sales among U.S. automakers.
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Auto sales collapsed in the fourth quarter and aren't expected to improve in the first quarter, the automakers say. But there is hope down the road, like by the second quarter, that sales will improve.

And not surprisingly, with the high-gas price scare this past summer, passenger-car sales are making a comeback.

"We expect the first several months of 2009 will feel very much like the last two months of 2008," said Emily Kolinski Morris, economist for

Ford

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, during the company's January sales call. "The first quarter is going to be bad no matter how you look at it."

The three major U.S. automakers all posted sales figures Monday, and all sales were off at least 30% from the previous year.

Looking further ahead, "by the end of the first quarter into the second quarter, we should start to see some improvement," Morris said. She cited the stimulus package expected from the incoming Obama administration, stabilization in financial markets and pent-up demand for new automobiles, given that "industry sales are well below replacement demand."

At

General Motors

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, the outlook is similar. "We have a lot of challenges with the economy, we are in a recession, (but) we think there is some cause for optimism as we move into 2009, especially in the second half of the year," said Mike DiGiovanni, chief sales analyst, on a sales call.

He too cited the expected fiscal stimulus by the Obama administration and said that GM expects total 2009 auto sales between 10.5 million and 12 million. The last time sales fell below 12 million was in 1982, when the total was 10.4 million.

Meanwhile, Chrysler President Jim Press said: "Our hope is there may be a little relief as we get to the second half of next year, (but) we're not counting on that."

For the full year, industry vehicle sales were around 13.5 million, Pippas estimated. The year-over-year decline was 16% to 18%, as sales reached their lowest level since hitting 13.1 million in 1992. By contrast, from 1999 through 2007, annual sales fluctuated between 16.1 million and 17.4 million.

For the fourth quarter, industry sales were 920,000, down 35% from a year earlier. That translates to a full-year sales rate of about 10.6 million, auto executives said. Fourth quarter sales of 2.5 million cars were the lowest since 1981, "and there are 70 million more licensed drivers on the road," Pippas said.

For Ford, full-year 2008 sales declined by 20%, while December sales fell 32%. Ford said its market share increased in December to 14.6%, up 0.7 points, marking its third consecutive month of increased market share. The gains were led by the F-series truck, the company said.

For GM, full year sales declined 22.9%, while December sales fell 31.4%. GM saw improvement in December, as its sales rose 43% over November's total. The gain was led by the Chevrolet Malibu, with a 39% sales increase for 2009, making it the highest percentage gainer in the top 20 vehicles sold in the U.S.

DiGiovanni said the industry's December sales were better than expected, since the annualized rate of 10.5 million to 10.6 million exceeded expectations. "A lot of analysts had the industry coming in below 10 million on a light vehicle basis," he said.

In 2008, he said, GM faced unique challenges, including an American Axle strike, supply disruptions, negative media coverage during congressional hearings in December and GMAC's inability to finance auto purchases for much of the third quarter. Nevertheless, he said, GM sold 760,000 more cars in the U.S. than Toyota did.

For Chrysler, 2008 sales dropped about 30%, while December sales fell 53%, "which is a pretty nasty number," said Steve Landry, executive vice president for sales. He said the steep drop reflects the company's successful effort to cut unprofitable fleet sales by 197,000 units annually, with a 63% drop in December.

Meanwhile, Toyota said its U.S. sales fell by 36.7% in December and by 15.7% for the full year.

As for market share, GM said its full-year market share was about 22%. Toyota's U.S. market share is about 15.7%. Ford said its market share rose in December 0.7 points to 14.6%, marking the first time since 1997 that it has boosted market share three months in a row. Chrysler's market share is about 11%.

In terms of trends, "the most significant was that the pendulum swung back to passenger cars in 2008," Pippas said. In 2008, passenger cars accounted for 51% of industry sales, the first time since 2000 that car sales exceed truck sales. Ford expects this trend, a return to a decades-old pattern, to continue as a result of generally higher gasoline prices.

All three automakers cited inventory reductions during the year. GM's inventory declined about 4% to 872,000 vehicles. Ford said its inventory declined about 17% to 440,000 vehicles, and Chrysler said its inventory fell 9% to 397,569 units.