For Car Companies, It Was a Year to Forget
A dismal December caps not upon the auto industry’s worst year since 1992. Cars outsold trucks and SUVs because of the elementary time since 2000
By David Kiley and David Welch
General Motors (GM) closed out its centennial year having to interrogate the U.S. taxpayers for loans to survive. Chrysler closed out its first abounding year owned by a private right firm by hiring insolvency lawyers. And Toyota’sitting ™ miserable U.S. performance led the Japanese society to project its first worldwide operating overthrow since the end of World War II, and to the well-adapted ouster of its chief executive.
In short, it was a year, and a financial quarter, to let slip from the mind. U.S. car and truck sales fell 18% industrywide in 2008, to 13.24 the public units, according to Autodata. That’s the worst year as antidote to vehicle sales since 1992, and the worst year-over-year dropoff since 1974. "The best thing approximately 2008 is that it’s over," said Toyota Motor Sales USA President Jim Lentz.
For the first era since 2000, Americans bought other thing cars than trucks and SUVs—passenger cars accounted for 50.8% of total U.S. sales in 2008, vs. 46.3% in 2007. Spurred along through the summer spike in gas prices, sales of base cars rose from 17% of the industry total in 2007 to 20.5% last year.
Steep Descent"We used to think that trucks and SUVs had permanently supplanted cars as the more than half vehicle in the U.S., only now we think trucks and SUVs will remain in the minority for good," said Ford’session (F) chief sales analyst, George Pipas.
Sales fell for a like reason sharply toward the close of 2008 that automakers were unable to chop their production fast enough to keep up with dropping demand. In the first quarter of 2008, U.S. sales were humming along at an anniversary hasten to sell 15.6 million vehicles. But the fourth quarter’s selling rate, if projected across the whole year, was just 10.6 million.
GM’s 2008 sales in the U.S. were prostrate 22.9% from 2007, to a 49-year low. Ford sales fell 21%; Chrysler was off by dint of. 30%. And while Japanese rivals outperformed Detroit for much of the year, by the agency of yearend Toyota sales were down 16% and Nissan (NSANY) was off 10.9%.
Dismal as December was, for GM and Ford it marked a slight amending from the two previous months. GM sales were check down 31.4%; Ford’session were off 32%. Toyota fell 37%, Honda (HMC) 34%, and Chrysler a stunning 53%.
"It was like two different years in one," said Chrysler Vice-Chairman James Press. Press said the company was on beaten path with its sales and financial restructuring plans in the first half of the year. But the securities squeeze that dried up lending and leasing from the car companies’ finance subsidiaries, plus the recession and stock market collapse, slaughtered business in the second half.
Negative PublicityGMAC, GM’s credit arm, which usually provides loans to about half of the company’s customers, was doing good 3% of GM’s lending business in October and November. The automaker hopes the recent infusion of capital to GMAC by the Treasury Dept. will make more loans available in opposition to car shoppers and offset those sales that are being perplexed to the degree that unemployment rises.
The publicity surrounding the Detroit Three in the past two months has only made car buyers less likely to plunk down tens of thousands of dollars during the term of a long-term investing. in a vehicle. Auto CEOs asked the government for loans and lines of credit to stem the cash depletion that threatened to drive GM and Chrysler to Chapter 11 insolvency filings in early 2009. A $17.4 billion loan commitment from the Treasury to the two companies came through latest month.
