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Originally published January 6, 2009 at 12:00 AM | Page modified January 6, 2009 at 9:09 AM

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U.S. auto sales stuck in reverse; Chrysler hit hard

Chrysler's December U.S. sales plunged by more than half and it sold 30 percent fewer vehicles in 2008, dwarfing the steep declines at the other major automakers as consumers remained uncertain about the economy and their jobs.

The Associated Press

DETROIT — Chrysler's December U.S. sales plunged by more than half and it sold 30 percent fewer vehicles in 2008, dwarfing the steep declines at the other major automakers as consumers remained uncertain about the economy and their jobs.

Chrysler said Monday its December sales dropped 53 percent from a year earlier because of the recession and fewer fleet sales. Toyota reported a 37 percent slide and Honda said sales tumbled 35 percent in the year-to-year comparison.

Ford's U.S. sales fell 32 percent in December. General Motors and Nissan both posted 31 percent declines.

Ford's sales for 2008 fell 21 percent from a year earlier, keeping the automaker in third place in the U.S. sales race, falling behind Toyota for the second straight year.

But Toyota is struggling, too, and announced it will be suspending production at all 12 of its Japan plants for 11 days, a stoppage of unprecedented scale for the automaker. The last time it halted production at all its Japan plants was in August 1993, when demand plunged because of a rising yen, and that was for only one day, according to the company.

Toyota's 2008 sales fell 16 percent to 2.22 million, compared with Ford's 1.98 million. Detroit-based GM's 2008 sales totaled 2.95 million, down 23 percent from the year before. Honda's 2008 sales fell 8 percent.

The automobile Web site Edmunds.com predicted sales for the full year will total slightly more than 13 million, down 18 percent from 2007 and the lowest level since 1992. Subaru said its U.S. sales crept higher in 2008, making the Japanese company likely the only major automaker with a yearly sales increase.

Subaru's U.S. sales rose 0.3 percent to 187,699 from 187,208 in 2007, as consumers snapped up its top-selling Forester and Impreza models.

Chrysler's December sales totaled 89,813 vehicles, compared with 191,423 in the year-ago month. Despite the plunge, the recent month's sales was a 5 percent increase over November levels.

Chrysler said the December drop included a 63 percent decrease in fleet sales.

Ford said it sold 138,458 light vehicles in December, down from 204,787 a year earlier. It doesn't see much hope for improvement in early 2009 but predicted a small uptick later in the year.

GM sold 220,030 light vehicles in December compared with 319,837 a year earlier.

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The results were boosted by heavy sales incentives, including financing offers announced near the end of the month after the Treasury Department said it would give $5 billion in federal aid to GM's ailing financing arm, GMAC.

The sales slump continues to mean good deals for consumers.

Aaron Bragman, research analyst at IHS Global Insight in Troy, Mich., said large incentives such as zero-percent financing and rebates will continue well into 2009 as automakers try everything they can to boost sales.

Full-size truck incentives ran from $7,000 to $8,000 in December, and Bragman expects that to continue all year.

"You look in the paper and the deals on brand-new GM pickups are astonishing," he said. "The discount that you get buys a heck of a lot of gasoline."

Hyundai is trying to woo skittish U.S. buyers by promising to let them return cars free for up to a year if they lose their jobs and can't make the payments.

The "Hyundai Assurance Program" applies to customers stricken by misfortune outside of their control, such as losing their job, becoming disabled or losing their driver's license for medical reasons. It covers depreciation up to $7,500.

John Krafcic, president of Hyundai Motor America, said traditional incentive spending in the fourth quarter was about half as effective industrywide compared with the same quarter in 2007.

"We needed to think about turning some other knobs to turn sales," he said. "This is all about fear."

Similar bold moves might be necessary throughout the year. Global Insight predicts U.S. sales will drop from 13 million in 2008 to 10.3 million this year.

Copyright © 2009 The Seattle Times Company

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