Janesville86°

Automakers to detail rough year for sales

Print Print
McClatchy-Tribune
January 3, 2008
— Major automakers on Thursday will close their books on what is expected to be the worst year of car sales in almost a decade, as buyers were too busy dealing with ballooning gas prices and persistent housing woes to flock to showrooms.

December’s likely retreat has done little to inspire hopes for a broad turnaround in the coming year, according to Goldman Sachs analyst Robert Barry, who predicted double-digit declines from a year ago for both General Motors Corp. and Chrysler LLC.


A continued reduction in fleet sales is to blame for GM’s fall, while a tough comparison on the car side probably led to the steep pullback at Chrysler, he said.


Barry is looking for Ford Motor Co. to fare the best of the domestic competition but only because December a year ago was so weak. “Ford continues to contend with a weak product cadence and aggressive competitor discounts in the pickup segment,” he said.


But the year-over-year declines weren’t confined to the state of Michigan.


Not even Toyota Motor Corp., was immune to the harsh economic headwinds that roiled the industry through the end of the year.


Car-buying research Web site Edmunds.com pegged Toyota to lead a retreat in results for the Japanese automakers with a 2.9 percent pullback in December.


Honda Motor Co. and Nissan Motors are also expected to post lower sales.


Edmunds.com forecast that Ford and Chrysler will drop almost 7 percent in December vs. a year ago, with General Motors down less than 1 percent.


Through November, Toyota sold 2.40 million cars and trucks in the U.S., a 3.2 percent increase from a year earlier, driven by strong demand for its fuel-efficient smaller car lineup, including the hybrid Prius and top-selling Camry.


Meanwhile, GM has seen its vehicle sales drop 6.3 percent in the U.S., but it still holds a significant lead on its home turf at 3.54 million cars and trucks.


Ford, having already surrendered its runner-up spot, perhaps for good, sold 2.36 million vehicles through 11 months, down 12.1 percent from 2006.


Despite facing challenges stemming from rapid growth as well as the beleaguered U.S. consumer, Toyota is also poised to put an end to GM’s 70-plus year reign as the world’s biggest automaker by the time the final global numbers are tallied.


Deutsche Bank analyst Rod Lache echoed popular Wall Street sentiment, calling for automakers to post a seasonally adjusted annual sales rate of 16.1 million cars and trucks for the final month of the year, down from 16.6 million a year ago.


That would also bring the 2007 total to 16.1 million, the lowest total since 15.5 million vehicles were sold nine years ago. And many believe the worst is yet to come.


Lache said he expects “below trend” sales of 15.7 million vehicles in 2008, “driven by deteriorating household wealth, near record levels of consumer leverage, ARM resets, declining consumer sentiment, rising inflation/gas prices, tightening credit, and potential risks to U.S. employment/disposable income levels.”


Edmunds.com analyst Jesse Toprak joined the camp girding for another rough spell in the coming year, although he did voice hopes for a rebound.


“Given the current economic challenges and the uncertainty associated with the upcoming presidential election, we do not anticipate that 2008 will be any more robust for the car business,” he said. “But, there is promise of a turnaround in 2009 when some macroeconomic factors may be very different than they are today.”


David Healy at Burnham Securities was more sanguine than some of his counterparts but he stopped well short of calling for a strong resurgence.


“I’m a little more optimistic than some,” he said. “We’re not exactly in store for a collapse but the industry won’t be comfortable this year.”



Print Print