January Auto Sales Bleaker Than Ever

The first month of the year is traditionally slow saleswise, but last month was colder than usual for almost every automaker

Auto sales were slow in January, even by January standards (it's typically the slowest sales month of the year), as consumers continued to worry about the economy, credit markets, and high gas prices.

The seasonally adjusted annual sales rate for January was only about 15.3 million light vehicles, down sharply from a seasonally adjusted annual rate of about 16.7 million units in the year-ago month, according to Woodcliff Lake (N.J.)-based AutoData.

Overall, U.S. light vehicle sales were 1,043,947 in January, 4.3% below the year-ago month, AutoData said. Light vehicles are passenger cars and light trucks, including minivans, pickups, SUVs, and car-based crossovers, and excluding medium and heavy trucks.

Sales Decline for All But One

Still, Ford Motor (F) stuck to its 2008 sales forecast of around 15.7 million light vehicles, down from about 16.1 million in 2007.

Forecasts for Ford and General Motors (GM) already include expectations of a slow first half and a stronger second half. The automakers have high hopes that the proposed economic stimulus package now making its way through Congress, plus the recent Federal Reserve interest rate cuts, will help boost auto sales in the second half of 2008.

"The Fed is moving more aggressively than we anticipated. There's going to be a big boost to the economy, particularly as we move into the third and fourth quarter," says Mike DiGiovanni, executive director of global market and industry analysis for GM.

GM had the best month of the top six foreign and domestic automakers, with January sales of 250,926; that was 2.6% ahead of the year-ago month, according to AutoData. GM said its retail sales, not counting sales to government, commercial, and rental fleets, were up 11.2%.

January sales for Ford, Chrysler , Honda (HMC), Nissan (NSANY), and Toyota (TM) all fell below the year-ago month, AutoData said.

New Models Boost GM

January is traditionally the slowest sales month of the year, says George Pipas, U.S. sales analysis manager for Ford. Including Ford, Lincoln, Mercury, Jaguar, Land Rover, and Volvo, Ford sales fell 3.9% in January to 159,276, AutoData said.

In most U.S. markets, January weather is also typically bad. Yearend December discounts also pull demand ahead, especially for luxury brands. And by January, some of the newness has worn off the new models introduced in the fall.

GM's sales success in January was partly due to new cars including the Chevrolet Malibu and the Cadillac CTS, and a trio of midsize crossovers, the Buick Enclave, GMC Acadia, and Saturn Outlook, plus increases for small, fuel-efficient cars such as the tiny Chevrolet Aveo.

DiGiovanni says that newly launched 2008 models accounted for about 40% of GM's retail sales in January, vs. only 15% for new 2005 models, back in January, 2005.

"We're really back, in the passenger car business," said Mark LaNeve, GM North America vice-president for vehicle sales, service, and marketing. He participated in a Feb. 1 conference call for Wall Street analysts and reporters, from a Chevy dealer meeting in Scottsdale, Ariz., timed to coincide with the upcoming Super Bowl, where GM is a sponsor. (LaNeve said he's rooting for the New York Giants, but he couldn't stay for the game.)

It probably helped LaNeve's mood that sales for the three biggest Japanese makes all fell below the year-ago month. That meant GM picked up about 2.6 percentage points of U.S. market share in January, to about 22.4%, AutoData said.

Stimulus May Help Auto Sales

Toyota sales fell in part because it is replacing the high-volume Corolla model, and sales of the old model fell 18.7% to 20,736. The new Corolla went on sale for only part of January, says Bob Carter, group vice-president and Toyota division general manager.

Sales for Toyota, including its Lexus division, slipped 2.3% to 171,849. Nissan North America, including Infiniti, dropped 7.3%. American Honda, including Acura, fell 2.3%, AutoData said.

Automakers are hoping for a better second half of 2008. GM's DiGiovanni says the proposed economic stimulus package is probably worth about $300 to $1,500 per U.S. household.

"Our analysis says 40% of that is going to get spent within about four months after the checks are received," he says. While GM expects relatively little of that money will translate directly to car purchases, higher consumer confidence and consumer spending in general should ultimately help auto sales, DiGiovanni adds.

"It'll be an immediate psychological effect. For our business, consumer confidence is really the key. In terms of actual spending on vehicles, it's marginal, probably," he says.

LaNeve agreed that the psychological effect is probably greater than the actual numbers. He said, "It will make people feel better about themselves, more secure in their job, more secure in the mortgages that are coming due, more secure in their outlook to the future."

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