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Ford sales dive 48% as auto slump continues

March 04, 2009|Ken Bensinger

February's miserable auto sales results -- a 41% slide reported Tuesday, capping 14 consecutive months of decline -- cemented one fact: The industry's woes are no longer the sole province of Detroit.

With just 688,909 cars and light trucks sold, Americans were buying cars at a rate unseen since 1981, according to Autodata Corp. Back then, there were 76 million fewer potential customers in the country. For the second straight month, more cars were sold in China than in the U.S., General Motors Corp. said.

On the same day Toyota Motor Corp. turned to the Japanese government for $2 billion in aid, it posted February sales results in the U.S. that had declined 40%. Honda Motor Co. reported a slide of 38%, and sales at Nissan Motor Co. dropped 37%.

The bad news was shared by all. BMW said its sales declined 38%, Chrysler's were down 44%, Ford Motor Co.'s 48% and General Motors said it suffered a 53% drop compared with a year earlier.

"In our view, we are in an automotive depression," said Efraim Levy, auto analyst at Standard & Poor's Equity Research. "Shellshocked consumers, fearful for their jobs and the value of their homes and stock market assets, are wary of making the sizable discretionary purchases of new vehicles."

From boardroom to sales floor, the pain is now so widespread that it has almost become routine. Hyundai Motor Co., which has been promoting a program that allows buyers to forestall payments for 90 days and bring back their cars if they lose their jobs, was crowing about the fact that its sales fell only 1.5% for the month.

"We're pleased," said Dave Zuchowski, Hyundai Motor America's head of U.S. sales.

Kia Motor Co. and Subaru Motor Co. were the only manufacturers to post sales increases on the month, albeit tiny ones. That, along with data released this week indicating that used-car sales were rising, suggested that the few consumers actually buying cars were extremely price-conscious ones.

"It was our worst month in my lifetime," said Beau Boeckmann, vice president of Galpin Motors in North Hills. His family runs the largest Ford dealership in the U.S., and he said sales were down more than 40%.

Many dealers are turning away customers because banks won't finance loans for them, even as their own inventory financing is threatened. "Right now is absolutely a survival game," Boeckmann said.

Today's grim automotive landscape is a far cry from what Mark LaNeve, GM's head of U.S. sales and marketing, called the "run and gun" days earlier this decade. In July 2005, GM alone sold 530,027 cars and light trucks, and the industry was on pace for a year in which 17 million vehicles sold in the U.S. "I don't think we'll ever return to those days," LaNeve said.

Now, with the economy in collapse, joblessness rising and credit still extremely tight, getting consumers to buy is a riddle that nobody, not even the wizards at Toyota and Honda, seem able to solve.

As salesmen say, the cars have been nailed to the dealership floor for months. In February, despite huge incentive spending industrywide, they stayed nailed. Last year Americans bought 13.2 million vehicles, and in February were on pace to buy just 9.1 million, the lowest monthly pace since 1981, according to Autodata.

"The fact of the matter is we do build cars and trucks that people want to buy," said Chrysler Vice Chairman Jim Press. "At the right price." According to Edmunds.com, Chrysler put a record $5,566 in incentives on the hood of its vehicles last month, but the price still wasn't low enough to reverse its continuing slide.

Despite the challenges, the sales problem must be solved if the industry is to survive. Two weeks ago, GM and Chrysler requested $21.6 billion in addition to the $17.4 billion in federal aid they already had received, indicating that they couldn't continue without taxpayer-funded infusions.

Their turnaround plans, both based on a sales rate of roughly 10.5 million vehicles this year, could be derailed if the numbers don't improve.

Ford insists it doesn't need federal help, but analysts question that stance considering Ford's sales are as bad as its rivals' -- a fact that Wall Street seems to be pricing into its shares, which haven't closed above $3 since mid-December.

And Toyota, which recently said it expected to post its first annual net loss in 50 years, Tuesday was forced to request $2 billion in loans from the Japanese government, in part to help it through the U.S. sales downturn.

"The question is when will we begin moving off of this bottom," said Bob Carter, head of Toyota's U.S. sales division.

Some questioned whether February, as dismal as it was, is even the nadir at all.

"It may be that this month is now the bottom," said Emily Kolinski Morris, Ford's senior U.S. economist. "But there's no anchor on the economic horizon to allow us to make that call conclusively."

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