U.S. Auto Sales Tank Further, China Overtakes U.S. Market

If January is any indication of how the rest of 2009 will go, Ford had better get out its begging plate, Chrysler should hand over its keys to Fiat and GM should start planning its funeral.

Although the entire industry is shuddering – the market decline by 37.1 percent to 656,976 vehicles, representing the fewest vehicles sold in a month since December 1981 – Chrysler, Ford and GM took the hardest hits. Ford fared “best”, tumbling 41.6 percent, followed by GM, limping in with a 48.9 percent decline. Chrysler’s sales are free-falling: it moved 55 percent fewer vehicles this January than it did last year, suffering its second straight month of 50 percent sales losses.

January’s annual selling rate of 9.8 million vehicles represents a 15th straight month of declines and the lowest rate seen since August 1982. The Japanese big three, Toyota, Honda and Nissan, weren’t spared any of the carnage those facts indicate: their sales declined 32 percent, 28 percent and 30 percent respectively. Bob Carter, vice president of Toyota Motor Sales, said the month unfolded as anticipated.

“There were no surprises in January for the industry and the segments,” he said. “The market turned out the way we anticipated.” Toyota doesn’t expect the market to rebound until the second half of the year. In 2008, January had the highest annual sales rate, at 15.6 million. By December, it had declined to 10.4 million; total sales checked in at 13.2 million last year. If 2009 mimics 2008’s trends, the U.S. automotive industry is in for one heckuva ride.

Hyundai-Kia and Subaru were the only two automakers to post sales increases. After Hyundai introduced its Assurance Program, which allows customers who lose their jobs within a year of purchase to return their vehicles at no cost, sales increased 12.5 percent. Hyundai posted a 9 percent sales increase over last year. Subaru, one of a select few automakers that posted a profit last year, saw its sales jump 8 percent.

Ford sales analyst George Pipas said the biggest reason for the incredibly low sales rate last month was a massive decline in fleet sales. He estimates that industry fleet sales were down an average of 65 percent or more from a year ago. Ford said sales to individual customers declined only 27 percent, compared to a 90 percent loss in rental company sales.

The quickly contracting U.S. auto market instigated another record as well: China’s auto sales are expected to surpass U.S. auto sales for the first time ever. Although official data is not yet available, analysts in China are estimating sales of about 790,000 units. Some argue the numbers aren’t directly comparable because China’s market includes a larger chunk of commercial trucks and buses. China leapfrogged Japan in 2006 to become the world’s 2nd biggest auto market.

China’s auto sales are estimated to have fallen from a record of 860,000 units last January by about 8 percent. In the same time period last year, over 1 million vehicles were sold in the U.S.

Source: Automotive News, The Detroit News

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