"You can't have an automobile industry without a functioning credit market." So said GM chief sales analyst Michael DiGiovanni, on Bloomberg radio. "This is an industry that runs on credit." That's been the case ever since the 1920s, when GMAC, one of the first automaker-owned financing companies, began to popularize the idea of buying a car "on time". Now, ironically, a dramatically weakened GMAC (which has suffered billions in losses on subprime home loans as well as losses from over-optimistic residual values on returning off-lease vehicles) is a significant factor in dragging down GM sales. GMAC followed Chrysler's captive financing arm by quitting the automotive lease market, and in October began restricting auto loans to only those customers with top credit scores (shutting out roughly 2 out of 3 buyers).
Of course, the Wall Street meltdown and attendant consumer credit freeze - not to mention tens of thousands of pink slips handed down in October - didn't just affect GM, or the domestic auto makers. The whole industry suffered. Total new car and truck sales were 838,156, an annualized rate of 10.56 million, the worst since the depths of the 1982 recession. Ford's George Pipas noted that "[At that rate], there are no hot segments or hot products."
He's largely correct. Thus, we're skipping our usual model-by-model rundown of winners and losers. Instead, we'll attempt to give more of an aerial view of the carnage, with a look at each of the major automakers.
General Motors -45%
Highs: Malibu +82%, Vibe +6%, full-size pickups
Lows: LaCrosse -49%, DTS -70%, STS -66%, Aveo -50%, Cobalt -61%, G5 -68%, Solstice -69%, Tahoe -77%, Suburban -70%, Envoy -78%
The aforementioned end of GMAC leases plus the much stricter lending standards, combined with an end to September's Employee Pricing sale, all but shut down GM sales in October, and the company saw deliveries plunge by 45 percent. And 1/3 of the cars it did move were dumped into fleets. "It was like someone turned off the lights in the month of October," said GM's Mark LaNeve. Malibu retail sales were a bright spot; full-size pickups weren't too bad; and the Saab 9-3 did a little better than it had been. To get things moving again, GM is expected to crank up its traditional, end of the year Red Tag Sale in early November, long before its usual Thanksgiving weekend start time, and to put red tags on Cadillacs, Saabs, and Hummers too.