U.S. automakers expect 2008 sales to be the lowest since 1998. Even Toyota is losing ground with increasingly strapped U.S. consumers
Car buyers continued to jam on the brakes in February, slowing their pace of new purchases while continuing to shift from big cars and big trucks to smaller, more fuel-efficient vehicles. Even mighty Toyota Motor (TM) is feeling the pinch.
Overall, U.S. light-vehicle sales fell to 1,176,236 in February. That was 6.3% below the year-ago month. Year to date, industry sales were off 5.4%, to 2,220,183, according to AutoData in Woodcliff Lake, N.J.
Forecasts for total 2008 sales are around 15.5 million units, the lowest in a decade. The best that can be said for February sales is that automakers said sales were in line with low expectations for the first half of 2008.
Downsizing from Trucks and SUVs
So far, interest rate cuts by the Federal Reserve and talk of a congressional economic stimulus package have come nowhere near offsetting the drumbeat of bad economic news: high gas prices that are headed higher, according to some forecasts; the housing slowdown and mortgage foreclosures; the credit crunch; and slow economic growth.
Small to midsize cars and car-based crossover models like the Ford Edge, which gained 45.9% in February, continued to outstrip the rest of the market. Many consumers turned away from traditional pickups and SUVs like the Ford Explorer, which fell 27.1% for the month.
"Let's move on to March," said the usually upbeat Mark LaNeve, vice-president for vehicle sales, service, and marketing at General Motors (GM) North America. In February, Cadillac was the only GM brand with sales ahead of the year-ago month, thanks to the redesigned 2008 CTS model. GM sales fell 12.9% in February, to 268,737. After two months, GM sales were down 6%, to 519,663 year to date.
Sales Down All Around
Despite the success of the Edge, Ford Motor (F) sales, including Jaguar, Land Rover, and Volvo, dropped 6.6% from the year-ago month, to 196,060. Year to date, Ford dropped 5.4%, to 355,336. Ford, like GM, has been intentionally cutting back on low-margin sales to daily rental fleets; that business was down 20% in February, accounting for about 60% of the company's decline. But the result wasn't much different for retail sales: Not counting fleets, sales were down 6%, the company said.
"What we're seeing today is definitely the downside of a business cycle, whether or not it's ultimately designated a recession," says Emily Kolinski Morris, Ford senior economist for North America.
Chrysler sales, including Dodge, Jeep, and Chrysler brands, fell 14%, to 150,093. Year to date, Chrysler was off 13.1%, to 287,485.
Toyota Skids, Too
Even Toyota is feeling the pinch. Total sales for Toyota Motor Sales U.S.A., including Toyota, Lexus, and Scion brands, were 182,169. That was 2.8% below the year-ago month.
Parent Toyota Motor in Japan outsold GM globally for the first time in 2007 to become the world's No. 1 automaker. But the February slowdown made it four out of the last six months in which the Toyota brand sold fewer vehicles in the U.S. than the year-ago month, and by the biggest margin. In December, for instance, Toyota brand sales were down only 0.7%; in January, down 1.4%. "We're certainly feeling the challenges of this economy, along with the other manufacturers," says Randy Pflughaupt, marketing vice-president for Toyota.
Toyota still spends less per car on sales incentives than the other top U.S. brands. But it is closing the gap, according to Edmunds.com, which estimated that Toyota's average incentive was $1,015 in February, up from $717 a year ago. Chrysler was highest, at $3,579, up from an estimated $3,498 a year ago, Edmunds.com said.
Nissan North America, including Nissan and Infiniti brands, posted a 1.2% sales gain in February, to 86,219. Nevertheless, year to date, the company was down 3%, to 162,824. Thanks in part to small cars like the Honda Civic and the Fit, sales for American Honda were up 4.9% in February to 115,397, including the Honda and Acura brands. Year to date, American Honda was up 1.5%.
The question heading into March isn't whether sales will continue falling, analysts say. It's whether the various sales forecasts are pessimistic enough. As GM's LaNeve says, "March is going to tell us a lot."