DETROIT (AdAge.com) -- Despite some thawing in the credit markets in February, automakers sold fewer new cars and trucks in the U.S., leaving auto executives wondering when the industry will bottom.
Ford Motor Co.'s George Pipas, sales analysis manager for the U.S., estimated that the industry's total sales, including medium and heavy-duty trucks, dropped by 42% last month vs. February 2008, totaling about 690,000 units.
The industry's combined U.S. February sales "are clearly a step down" from the prior month, which demonstrated some life in retail sales, said Mike DiGiovanni, exec director-global market analysis at General Motors Corp. He said February was the worst month since 1982 for automakers in the U.S.
General Motors Corp. reported its sales slumped by nearly 53% in the month to 127,296 vehicles, mainly due to a 75% reduction in fleet sales.
GM's three brands currently "under review" -- Saturn, Saab and Hummer -- posted even larger declines, off a combined 59% in February vs. a year ago, Mark LaNeve, VP-vehicle marketing, sales and service in North America, said during a conference call this afternoon. "Consumers' perceptions are there's a lot of distress out there and that there's bigger discounts than there actually are," he said. GM's February incentive level averaged about $4,200 per unit last month, or flat with January 2009, but below Chrysler.
That jibes with auto-information site Edmunds, which reported today that Chrysler had the highest incentives of the six largest automakers in February, at $5,566 per unit. The industry's average incentive per vehicle rose to a record $2,914 per vehicle sold last month, or 20% of sticker price. "The last time sales were at this level was in the early 1980s, when the country had 25% fewer licensed drivers," said Jesse Toprak, executive director-industry analysis at Edmunds. "Back then, you could practically buy a new car for the amount that some of today's automakers are spending on per-vehicle incentives."
Mr. LaNeve said GM had some bright spots last month -- retail sales of its mid-size crossovers jumped by 35% and Chevrolet Malibu jumped by 33% to 11,000 units vs. February 2008. At $26,000, GM had the highest average transaction price in the industry last month. "We've made a lot of progress, but we're suffering from a weak market," he said. "That's what's killing all of us, although we've been able to offset that with higher transaction prices."
Toyota still optimistic
Toyota Motor Sales USA reported it sold 109,583 vehicles, or 37.3% fewer than last February, which encompasses a 37% drop for Toyota and Scion to 96,475 units and nearly a 36% drop for Lexus to 13,108 units. Toyota's financial arm continued to finance between half and 55% of all buyers for Toyota Division products in February, said Bob Carter, group VP-general manager of the brand. "That's close or a little below our historical levels," he said.
Mr. Carter said the automaker is still optimistic the industry "will start pulling off the bottom" late in the second quarter or in the third.
Ford Motor Co. said it sold 96,044 new Ford, Lincoln and Mercury vehicles in February, a 48% plunge from a year ago, when the automaker posted a strong sales month. Mr. Pipas said the automaker's fleet sales dropped by 53% from a year ago to 32% of all its new vehicles sold.
Chrysler reported its total new-vehicle sales dropped by 44% in February to 84,050 units vs. a year ago. Even so, Chrysler said that although its retail share dropped by 26% in the month, that was less than its projected decline for the entire industry of 35%. It bumped share to 11% from 9.6% in retail share in February 2008.
Chrysler to extend price deal
Steven Landry, exec VP-sales, marketing, service and parts, said the automaker is extending its "Employee Pricing Plus Plus" deal on '08 and '09 models, which was set to expire this week, through the end of March. Additionally, he said Dodge is offering a new incentive on the Ram 1500 pickup -- a free Hemi engine package, worth up to $1,200, which can be used with the employee-pricing deal.
"The availability of consumer credit from Chrysler Financial, along with a consistent promotional message and advertising share of voice, influenced the improvement in our February retail sales," Mr. Landry said.
Omnicom Group's BBDO Detroit, Troy, Mich., which laid off 50 more people last week, handles Chrysler's consolidated creative accounts.
The other two major automakers, American Honda Motor Co. and Nissan North America, also reported big drops in February; a 35.4% plunge to 71,575 units for Honda and Acura and a 37% decline for Nissan and Infiniti to 54,249 units vs. February 2008.
"We hope we're seeing the trough," said GM's Mr. DiGiovanni. "These are unsustainable levels" for the industry, he added.