US auto sales hover near historic lows in February
General Motors' sales tumbled 53 percent from a year earlier, while Ford's U.S. sales fell 48 percent and Chrysler's dropped 44 percent. The major Japanese automakers fared only slightly better.
Overall auto sales were down 41 percent from February 2008, but up 5 percent from January, according to Autodata Corp. and Ward's AutoInfoBank. January marked the industry's worst monthly performance since December 1981.
The increase was a good sign, but it's far less than the usual 14 percent sales bump from January to February, and it doesn't necessarily mean sales have hit the bottom, said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com.
"It does mean that there's some life out there," Toprak said.
Things are so bad that GM, which marked its worst February sales since 1967, is considering a program to let buyers keep their cars for a time without making payments if they lose their jobs.
The huge stock market decline helped push down sales, said Mark LaNeve, GM's North American vice president of sales, services and marketing. The Dow Jones industrial average ended the month at its lowest level in nearly 12 years.
"People are seeing, tracking their investments going down 3, 4, 5 percent a day or a week," LaNeve said. "That doesn't put you in a mood to go out and splurge on a new vehicle."
Automakers sold 688,909 cars and trucks last month, and there's little they can do to spur sales until the economy recovers, Toprak said.
"You can spend money on marketing or incentives. That's all you can do," he said. "Neither is having a big impact on sales. That tells us it's really consumer confidence and the general negative state of the economy overall causing consumers to postpone making purchase decisions."
According to one figure closely watched by the industry, February's annualized sales rate was the lowest in more than 27 years, dropping to 9.1 million vehicles. That figure makes adjustments for seasonal sales fluctuations.
Toyota Motor Corp.'s sales fell 40 percent. The global auto sales leader was forced to seek aid from the Japanese government Tuesday for its finance arm.
Automakers and analysts have been predicting sales will rebound in the second half of this year, but they are becoming less certain. As recently as January, they were predicting that U.S. sales this year would total around 11.5 million vehicles, but as the economy has worsened, they have lopped off a million or more sales from their estimates.
The incentive GM is considering would be similar to Hyundai Motor Co.'s "Assurance" program, which helped it buck the double-digit sales decline with only a 2 percent drop last month. The South Korean company's program allows buyers to return a vehicle within a year if they can't make the payments due to a misfortune such as job loss or disability.
LaNeve said a GM plan might be more useful to reassure buyers.
"We're not crazy about the Hyundai program because all it really does is keep your credit from getting wrecked," he said Tuesday. "You lose your job, you have to turn your car in. If you lose your job, you need your car, right? How are you going to get a new job?"
GM is trying to fashion a program that's more consumer friendly but hasn't figured one out yet, he said.
Ford Motor Co.'s top economist said retail sales to individuals had been stable for four months but dropped last month, indicating this may not be the bottom.
Ford's forecast still calls for a modest second-half recovery as economic stimulus measures take hold, economist Emily Kolinski Morris said.
Those who do buy are more often opting for a used car or truck. Edmunds' data show that 27 percent of people who intended to buy a new car in February switched to used at the dealership.
There is hope for a rebound, however. Rising used car prices are an indication that new car sales may be near the bottom, because more people will opt for new cars when they see they won't save as much by buying a used vehicle.
Higher values also make dealers more likely to take trade-ins on new cars, which could move the market to "a more natural balance between new and used," said Ken Czubay, Ford's vice president of U.S. sales and marketing.
Industrywide, the average incentive per vehicle last month rose 8 percent from January to $2,914 per vehicle sold, Edmunds said. Incentives climbed to an average of 20 percent of the sticker price of a new car, and they topped more than $10,000 on some vehicles.
Incentives vary be region, but buyers were getting an average of $8,504 in rebates and subsidized financing on the Cadillac XLR sports car, while incentives averaged $8,355 on the Dodge Ram 3500 pickup and $8,144 on the Infiniti EX-35 crossover, according to Edmunds. Some vehicles left from the 2008 model year had higher incentives, including cash to dealers that often got passed on to customers, Toprak said.
The latest sales slide casts further doubt on the financial viability of GM and Chrysler. They need to sell cars and generate critical cash to supplement the $17.4 billion in government loans that are keeping them in business.
The sales slump hit Ford at both ends of its model lineup. Sales of its F-Series truck, traditionally the best-selling vehicle in the U.S., fell 55 percent, while sales of the Focus small car dropped 39 percent.
Associated Press writers Kimberly S. Johnson in Detroit and Bree Fowler in New York contributed to this report.