Ford and Honda report steep declines in March auto sales
Car sales continued their dark and cloudy run in March, but that didn’t stop automakers from casting about for silver linings.
Sales of new cars and light trucks in the U.S. last month declined 37% from the year-earlier period, according to Autodata Corp. The dismal performance marked the 15th straight month of declines for the industry.
Yet, desperate for any good news, executives at major automakers found surprising encouragement in the numbers.
“I think we’re seeing the first signs of a brightening in outlook for the industry,” said Mike DiGiovanni, chief sales analyst at General Motors Corp., which reported a 45% sales decline for the month and on Monday learned that President Obama deemed its restructuring plan inadequate.
“Despite the difficult conditions, we are seeing some signs for optimism,” said Bob Carter, group vice president at Toyota, whose sales declined 39%.
At Chrysler, which also got stern treatment from the president, spirits were relatively high despite a 39% sales drop in March and 46% so far in 2009. “We feel we’re making the progress we’ve been forecasting,” said company Vice Chairman Jim Press.
Collectively, it was a curious talking point from an industry that, even after a slight uptick in March, is on pace to sell only 9.89 million cars this year -- a quarter fewer than in an already weak 2008.
Ford Motor Co.’s sales were down 41%, while Honda Motor Co.’s fell 36%. Nissan, the last of the six largest manufacturers that sell in the U.S., reported a 38% decline.
No manufacturer reported a sales increase for the month, although Kia Motors Corp., Hyundai Motor Co. and Subaru all held their declines to single digits.
Much of it has to do with context, analysts say. “We have a depression level of car sales in this country,” said David Cole, chairman of the Center for Automotive Research. “Consumers have been barraged by bad news about the auto industry and need a reason to find confidence.”
GM has 60 days, and Chrysler 30, to prove to the Obama administration that they can get on track financially. If not, they face being cut off from further federal aid and possibly having to file for bankruptcy. Combined, the two automakers have borrowed $17.4 billion from taxpayers.
Although other automakers aren’t in the same bind as GM, the tough economy has been slamming all of their sales. The tide of bad news about the auto industry seems to have kept buyers of all stripes on the sidelines.
“These are not ordinary times,” said George Pipas, chief sales analyst at Ford, which was perhaps the most guarded among carmakers in its assessment of the current market. “We think there might be some improvement out there, but we’re at best cautiously optimistic.”
In their rounds of calls to Wall Street analysts and reporters Tuesday, the auto companies dug for highlights -- finding a lone model in their lineups that sold on par with a year earlier, for example.
But mostly they predicted that a series of stimuli spelled better things to come. The industry widely applauded a plan floated by the president on Monday to increase sales by paying consumers to turn in aging cars for new ones. Automakers such as GM went a step further, suggesting that the administration should look into sales tax rebates as well.
Both GM and Ford touted the fact that they were working hard to cut traditional incentives to car buyers -- and thus increase profitability -- in recent months.
Now the two automakers are trying new tactics. On Tuesday, Ford and GM announced incentive programs that guarantee car payments for purchasers who lose their jobs.
“We’ve had a great reaction already,” said Mark LaNeve, head of U.S. sales and marketing for GM.
A similar program was launched by Hyundai this year, with positive results. Last month, Hyundai’s sales fell only 4.8%, practically a victory in the current market. For the first three months of the year, the automaker’s U.S. sales are up half a percent, compared with an overall industry decline of 38%.
“Even with continued economic stress and industry uncertainty, this performance is a clear indication that the Hyundai brand is sustaining its momentum and expanding its relevance,” said Dave Zuchowski, Hyundai’s vice president of U.S. sales.
GMAC, the financing arm for GM, said Wednesday that it approved more loans to borrowers with lower credit scores in March than in previous months, and that it would tentatively begin financing loans to subprime car buyers in April.
Scarcity of consumer credit has been a serious problem in the industry over the last six months, particularly for U.S. automakers, who have dropped automotive leasing altogether.
Both GMAC and Chrysler Financial, the financing arm for Chrysler, are owned by Cerberus Capital, which also owns Chrysler.
Obama’s plans for Chrysler require it to reach a deal to merge with Italian automaker Fiat by May in order to receive more funding from Washington. Chrysler’s Press managed to find encouragement in the president’s assessment that the company could not survive on its own.
“The administration’s announcement gave Chrysler a clear path to finalize plans for the future,” Press said. “Our goal is to translate the confidence to our customers.”
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