A 25% decline in sales of light trucks and sport utility vehicles in July dragged the auto industry to one of its weakest months on record, with results announced by carmakers Friday providing more evidence that 2008 could be among the worst years ever.
Americans bought 1.14 million vehicles last month, 13% fewer than a year earlier. Among the hardest hit companies were those that manufacture a lot of trucks: Chrysler was down 29%, while Ford Motor Co. and Toyota Motor Corp. also declined by double digits, according to Autodata Corp.
But when it came to bad news, it was hard to beat General Motors Corp. GM not only saw sales slide 26% in July, but it also reported its third-worst earnings in history, losing $15.5 billion in the second quarter.
Overall, it was the eighth straight month of sales declines for the world's automakers. Although weak sales figures have become commonplace, industry analyst George Magliano at forecasting firm Global Insight contended that "it was not simply more of the same," because July is traditionally one of the strongest selling months for the industry, and carmakers have been offering huge incentives in hopes of boosting sales.
"July was absolutely horrendous," Magliano said.
Sales of fuel-efficient passenger cars -- up 0.3% industrywide in July -- benefited a select few. Nissan Motor Co. was up a surprising 8.5%. Kia Motors Corp. and Subaru both reported gains above 5%.
Honda Motor Co., which has been strong for most of the year, saw a 1.6% setback in July, which it blamed in part on the fact it did not have enough inventory of small cars such as the Civic to meet demand.
As in recent months, most carmakers pointed a finger at high gas prices, slumping consumer confidence and weakness in pickup and SUV sales, coupled with shortages of small cars.
With July's report they added tighter credit to the list, saying that tens of thousands of customers who would have been eligible for financing a year ago are being turned away today because lenders are being more cautious.
Another new wrinkle: Automakers are taking huge losses when selling large vehicles coming off leases.
GM said Friday that it took a $1.3-billion write-down associated with leasing losses at GMAC, the automaker's 49%-held financing arm. The auto and mortgage lender on Thursday reported a $2.5-billion loss in the second quarter as residual values for leased SUVs and trucks plummeted.
