Soaring gas prices put auto sales in the ditch

If these were normal times for the auto industry, Galpin Motors, the nation's top-volume Ford dealership, would have perhaps 400 F-Series trucks on its lot in North Hills.

On Tuesday, it had 746.

"We're selling small cars as fast as we can," said Bert Boeckmann, president of the dealership, noting that gas savers such as the Ford Focus and the Mazda 3 on his Mazda lot were selling like hot cakes. "But one thing I've got plenty of is trucks."

Boeckmann's problem is emblematic of what's troubling the entire auto industry in a time of $4-a-gallon gasoline. On Tuesday, carmakers reported that sales in June fell to 1.19 million vehicles, an 18.3% drop from the same month last year, according to Autodata Corp. It was the worst slide yet in a string of monthly declines dating to November.

The automotive sector represents about 4% of the U.S. gross domestic product, but its continuing tribulations threaten to diminish that role, and paint an ugly picture of the economy as a whole, experts said.

"You basically have consumers saying they're going to pay their mortgages and put food on the table and they're not going to do much more," said Ken Goldstein, economist at the Conference Board. "They're not going to be buying lots of vehicles. They're not going to be buying much of anything now."

Through the first six months of 2008, sales were down 10.1% compared with last year. Total vehicle sales nationwide in 2007 were 16.1 million. At the current rate of sales, 2008 totals could be well below 15 million.

June's total was dragged down by an 18% decline for General Motors Corp., a 28% drop for Ford Motor Co., and a 36% slide for Chrysler, the worst of any carmaker.

The weak results for the Detroit automakers, with lineups rife with gas-guzzling trucks and sport utility vehicles, were not unexpected. But the Big Three had some surprising company at the bottom of the sales board: Toyota Motor Corp.'s sales fell 21%, while Nissan Motor Co. saw an 18% drop.

The chief problem, observers uniformly agree, is the skyrocketing price of oil. As gasoline rose above $2 a gallon and then $3, consumer appetite for the high-margin trucks and SUVs that fueled profits in Detroit in the early part of the decade waned. With the average price of a gallon of unleaded topping $4 nationwide for more than three weeks now, small cars are just about the only vehicles selling. Sales for every category of car and truck were down in June except compact and economy cars, which increased 6.8%.