Simply Awful October for New Car Sales in US

GM says it is the worst month for sales on a per-capita basis since WWII

By Brendan Moore

11.04.2008

Just when there’s hope that the decline in the auto market in the US has bottomed out, the numbers get even worse. When does the pain end?

Auto manufacturers sold only 838,186 cars and light trucks in the largest vehicle market in the world last month, according to the final tally released yesterday.

Here is a sample of some of the quotes from people in the industry regarding last month’s sales figures:

“One thing that’s clear this month is that absolutely no one is immune,” Rebecca Lindland, an analyst with IHA Global Insight, said. “This is a situation that is really dire.”

Michael DiGiovanni, GM’s top sales analyst, stated that, “This is clearly a severe, severe recession.”

“Consumer confidence is the No. 1 reason we are where we are,” said Jesse Toprak, chief market analyst for the auto-research Web site Edmunds.com.

“If you adjust for population growth, this is probably the worst industry sales month in the post-WWII era,” Mark LaNeve, GM’s vice president for sales and marketing, told reporters yesterday. “Until the credit markets open up and consumer confidence improves, the entire U.S. economy, and any industry like autos that relies on financing, will suffer.”

“This is the toughest economy we’ve seen in a long time,” Mark Barnes, COO of VW Group of America, said.

The modest decline in U.S. economic output in the third quarter “is not likely to be the worst we will see in this cycle,” Ford Motor Co. economist Emily Kolinski Morris said in a conference call with analysts, in response to a question about when the auto market will improve.

How bad was it?

The industry sales as a whole declined 32% from last year’s figures. GM’s sales plunged a staggering 45%, prompting Mark LaNeve to describe what happened in October as “carnage”. Toyota sales were down 23%. Porsche sales dropped a dizzying 50%. Honda dropped 25%. Ford sales plunged 32% and Nissan sales had a similar dramatic swoon at 33%. Chrysler, of course, had a bad month, although not as bad as some, at an almost 35% decline. Huyundai was down 34.5% in October.

More ominously, October’s numbers trend out to 10.9 million units on an adjusted basis. What this means is that if sales continue at the current pace, auto sales will come in at under 11 million units for the next 12 months, which will make it the lowest amount of annual sales since 1983. October was the second straight month sales fell below I million units per month.

U.S. auto sales have averaged approximately 16.8 million units in this current decade, driven by the popularity of SUVs and crossovers, cheap gasoline, easy credit and acquisitive consumerism.

With many industry analysts predicting that new car sales in 2009 will get even worse than they are in 2008, bankruptcy looms as a probability for a couple auto manufacturers and many, many industry suppliers, without some intervention on behalf of the federal government.

Regardless of how the public feels about the US auto industry right now, it is one of the pillars of the US economy in terms of jobs and economic activity, and there is considerable pressure for the government to do something to stem the deterioration in the industry sector.

If that intervention happens, it is going to have to happen soon in order to work. It will be interesting to see just what the man elected President after today’s election will do to help the auto industry in the US.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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3 Comments

  1. Since Obama will be the President here in a couple of months we don’t need to guess “who”, we just need to guess “what” he and the Democratic Congress will do to help the auto industry in America. I bet it will be almost nothing, but I hope I’m wrong. Don’t all those guys drive foreign cars?

  2. Obama, like quite a few politicians, drives a Ford Escape Hybrid, as that seems to be the only acceptable car to both sides since it’s both domestic and “green”. Previous to that he drove a Chrysler 300C.

    I don’t understand the insinuation that Democrats would prefer not to help…aren’t they the “big government” party so eager to meddle with the free market?

    US automakers are at a crossroads. They either need to figure out how to take back market share, or redefine themselves into narrower niches. Asking the government to dump money in their lap doesn’t guarantee either, which is why a lot of people are skeptical of ANY aid package.

  3. Market, schmarket. I don’t care which party extends a hand, I would just like to see the auto companies get just a percentage of the money doles out to the finance companies, who don’t employ nearly as many people.

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