The last time auto sales were this bad, the U.S. had just gone to war in Iraq -- for the first time.
Total U.S. automobile sales in October slumped to 838,156 cars and light trucks, a 32% decline from the same month last year. That's the lowest single-month sales figure since January 1991, when Operation Desert Storm began under President George H.W. Bush.
It was the slowest month yet in a horrible year for automakers that have found themselves pummeled again and again by high gasoline prices, low consumer confidence and frozen credit markets. And as an important indicator of that crucial spot where industry meets consumers' wallets, the results are a fresh reminder of the troubled state of the economy.
General Motors Corp. led the charge to the bottom. The largest U.S. automaker reported a 45% decline in sales for the month compared with October 2007, dropping to 166,744 vehicles sold. That's the first time the automaker's monthly sales have fallen below the 200,000 mark since 1975, when nearly 100 million fewer people lived in the U.S.
"I've never seen a month like this," said Mark LaNeve, GM's U.S. sales and marketing chief. "It was like somebody turned off the lights in October."
Other automakers fared little better. Ford Motor Co. reported a 29% sales decline, while Chrysler was down nearly 35%. Among the imports, Toyota Motor Corp.'s sales were off 23% and Honda Motor Co.'s were down 25%. Nissan Motor Co. said its sales declined 33%, while European automakers combined were down 18%.
From January through October, industry sales fell 14.6% compared with the first 10 months of last year, according to Autodata Corp., putting the industry on a pace to sell about 13.5 million vehicles this year. That's a huge decline from 2007, when Americans bought 16.1 million vehicles.
"We are nowhere near mentioning that this is the bottom," said Jesse Toprak, executive industry analyst at Edmunds .com, who like other experts suggested that 2009 could be as bad as this year, if not worse.
Soaring gasoline prices played a role in slowing sales of trucks and sport utility vehicles. But just as prices at the pump started to drop, the credit crisis emerged -- making it difficult for carmakers to fund operations, dealers to acquire inventory and consumers to get loans for purchases.
Add to that plummeting consumer confidence and automakers face this grim prospect: Those brave souls willing to step onto a dealership lot today are, more likely than not, rejected for financing. GM said the average FICO credit score on a loan originated in October by its lending arm, GMAC, was 740. About 60% of the U.S. population has a score lower than that.
"Clearly the financial crisis that afflicted Wall Street earlier this year is now being fully felt on Main Street," said Mike DiGiovanni, GM's executive director of global market and industry analysis.
Not that automakers haven't tried to turn things around. In the last three months, they've tried nearly every trick in the book to juice sales, including employee pricing deals on GM lots, no-interest financing from Toyota (a first from the automaker) and huge cash-back incentives -- an average of $5,685, according to Edmunds, on 2008 model-year trucks at Ford, Nissan and other carmakers.
It has been to little avail. Only a handful of models showed sales gains for the month, and carmakers found themselves in the uncomfortable position of praising sales that were only a bit negative.
Bob Carter, head of Toyota's U.S. sales division, said eight of the 11 models with the interest-free financing showed a sales increase from September. But only two, the Corolla and Sequoia full-size SUV, actually had more sales this October than a year earlier.
"There's this general malaise about going out and spending right now," said Wesley Brown, a partner at industry marketing group Iceology. "People are sitting on the sidelines."
For U.S. carmakers, the sales drought is particularly harsh. Because their revenue has declined sharply at the same time that their access to debt markets has dried up, they are burning through their own cash at an alarming rate.
The industry's woes have driven the Detroit carmakers to seek aid from Washington, approaching Congress, the Treasury Department and the Federal Reserve for funding or other financial relief. Meanwhile, Ford has been exploring sales of assets, such as its stake in Mazda Motor Corp., and GM has been in talks with Chrysler about a possible merger as a way to reduce costs.
Last week, the lending arms for the three U.S. carmakers sought and were approved for access to a special short-term lending program from the Fed. In addition they have been exploring the possibility of selling bad auto loans, and in GMAC's case, mortgages, through the Treasury Department's new $700-billion program to buy troubled loans.
