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New-car sales fall at Ford, Nissan as 'cash for clunkers' ends

After the government program boosts August sales, Ford sees a 5.1% dip in September compared to a year ago; Nissan, 7%. That's bad news for the month but not for the third quarter as a whole.

October 02, 2009|Ken Bensinger

New-car sales fell in September as the predicted post-"cash for clunkers" slump dragged the U.S. market down to its lowest sales rate in seven months.

Without government cash on the table, worried consumers shunned dealership lots, buying just 745,997 cars and light trucks, a 23% slide from a year earlier, when 964,873 vehicles were sold.

Calculated on an annualized basis, September sales ran at just a 9.22-million-unit clip, according to Autodata Corp. That's the lowest level since February, when the annualized rate was 9.12 million, a sign that consumers remain cautious about spending in the midst of a weak job market.

Industry experts say sales of new vehicles should total at least 12 million units a year in order to replace vehicles that are scrapped or no longer used. In recent years, annual sales have been much higher than that, staying above 16 million units for most of this decade.

"Consumer spending and sentiment are still weak," said Mike DiGiovanni, chief sales analyst at General Motors Co., which saw its September sales fall 44.8% compared with a year earlier. He attributed a portion of the decline to the "clunkers hangover," but also pointed at economic indicators. "We're clearly not going to be completely out of the woods for a while."

Nearly every major automaker reported declines for the month. Chrysler Group reported a 42.1% decline, Toyota Motor Corp.'s sales fell 12.6%, Honda Motor Co.'s were down 20.1% and Nissan deliveries were off 7%.

The only large automakers to report year-over-year increases were Hyundai Motor Co. and Kia Motors Corp., with increases of 27.2% and 24.4%, respectively, on a combined total of just over 53,000 units purchased.

The dismal tallies compare with an overall industry sales increase of 1% in August, when the government's vehicle sales stimulus program offered vouchers of as much as $4,500 to trade in old cars for new ones. Roughly 700,000 new cars were sold as a result of the program, which ended Aug. 24.

"Cash for clunkers is behind us. Maybe we'll never have to mention it again," said George Pipas, chief sales analyst at Ford Motor Co., which saw its sales slide 5.8%. Although he believed that the termination of the government incentive hurt sales in September, he didn't expect much of a future effect. "No excuses," Pipas said.

For its part, GM said it had calculated that a total of 200,000 sales that would have occurred later were pulled into the clunkers sales period. Of those, it said, 70,000 would otherwise have been registered in September.

Yet because August was so strong, with sales above 1 million units for the first time in a year, the third quarter has turned out to be the best in this overall dismal year for auto sales.

Inventories, overloaded in the spring, are now stretched razor-thin because automakers first cut production and then faced unexpectedly high sales thanks to the clunkers program.

Ford said its inventory dropped by 40,000 units during the third quarter, and GM said its stock of cars and trucks on dealership lots was down 41% at the end of September compared with a year earlier.

Toyota said that it had only enough inventory of its hybrid Prius to last 7.7 days at current selling rates, far below its preferred level of 45 to 50 days.

Dave Greiner, owner of a Pontiac Buick GMC dealership in Victorville, said his sales were off about 15% for the month, in part because he couldn't get more popular models on his lot.

"I have people on wait lists for the new Buick LaCrosse and GMC Terrain, but I can't get the things," Greiner said.

GM said it had boosted production and hoped to get vehicles to dealers in coming weeks.

Some analysts took heart in other positive signs hidden in all the negative data.

Among them was the continuing strength of the two Korean automakers, Hyundai and Kia. Their combined market share reached 7.1%, up from 4.4% a year earlier, and five of the 10 current Hyundai vehicles posted higher sales this September than a year earlier.

Another eye-catcher was Ford's F-series pickup sales, which rose 3.5% for the month to 33,877 trucks sold, a second straight monthly increase for the vehicles.

Ford said mainly small businesses and individuals, rather than large companies, purchased the pickups, an important indicator of confidence in the construction and home-building markets. Yet sales of GM's top pickup, the Silverado, declined 62%, and deliveries of Toyota's Tundra fell 18%.

Executives at most automakers expressed amazement -- and exhaustion -- at the unpredictable nature of the market.

"I've never seen a roller-coaster quarter like this," said Ken Czubay, head of marketing, sales and service at Ford. "This was an extremely volatile period."

Executives at automakers were lukewarm in their expectations for the fourth quarter. They expect sales to come in above levels seen in the first half of the year, but continued high unemployment and consumer reluctance are likely to depress sales.

"We believe the remainder of 2009 will continue to be a challenge for the U.S. automotive market," said Peter Fong, Chrysler's top sales executive. "Credit markets have thawed slightly but still remain tight, and consumer confidence, as we saw in September, is tenuous."


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