Auto sales: From bad to worse
Will September be the cruelest month for automakers?
Automakers have struggled for months to move metal as consumers have been hammered by high gas prices and worries about job security. While those troubles remain, the drying up of credit for auto loans has made a bad situation worse, according to data tracker Edmunds.com.
Santa Monica-based Edmunds is forecasting that auto sales will fall 19.7% in the United States this month compared to September 2007, which would be even worse than last month’s 15.5% decline. It would also mark the 11th straight monthly drop for year-over-year auto sales.
“The automakers and dealers tell us the credit crunch is the No. 1 reason for the drop in sales,” said Michelle Krebs, senior editor at Edmunds’ AutoObserver.com. “People want to buy cars but can’t get financing.”
Besides the actual effect the Wall Street crisis has had on credit markets, it has also had a psychological effect on car buyers, Krebs added. “Consumer confidence ... is another critical factor that just isn’t there,” she said.
It hasn’t helped that several automakers have cut way back on their leasing programs, in part because of the credit crunch.
Edmunds expects total September sales in the U.S. to dip to 1.05 million vehicles. Edmunds analyst Jesse Toprak noted that the last time the industry sold fewer than 1 million vehicles in a month was February 1993.
“Traditionally, October sales are worse than they are in September, so we don’t likely have much to look forward to next month,” Toprak said.
The sales slump has caused a world of hurt for the automakers, especially the Detroit 3, which tend to rely more on big trucks and SUVs than do their Japanese rivals. But even the Japanese have been suffering, including Toyota, which notched an almost 10% drop in sales last month and is forecast by Edmunds to record a 17% decline this month.
The House of Representatives this week funded a $25-billion loan package to help car companies retool factories to meet tougher new fuel economy standards. But those loans won’t get more fuel-efficient vehicles onto dealer lots immediately — or put cash in car shoppers’ wallets.
The squeeze is being felt in the showroom. One of the nation’s biggest Chevy dealers, Georgia-based Bill Heard Enterprises, said Wednesday that it was closing all 14 of its dealerships, throwing 2,700 people out of work. The dealer blamed its downfall on, you guessed it, high fuel prices, slumping sales and the credit crunch.
As bad as things have been for the car companies nationally, the situation has been even worse locally. Auto sales in an area that includes most of Los Angeles County fell 27% in August, compared to the nationwide drop of 15.5%, according to Experian Automotive.
The automakers are expected to announce their September sales numbers next Wednesday.
-- Martin Zimmerman
Chart data from Edmunds.com; chart by Los Angeles Times
