Auto sales plunge as credit crunch hits
WASHINGTON (Reuters) - Major automakers reported plunging U.S. sales for September -- led by a 34 percent slide at Ford Motor Co -- as an escalating credit crisis hit the slumping industry and raised new doubts about when the world's largest auto market would stabilize.
The 26-percent drop in industry-wide auto sales was sharper than expected and coincided with a crisis on Wall Street that automakers said rocked consumer confidence and made it harder for remaining shoppers to finance vehicles.
Sales were down 24 percent at Honda Motor Co, 32 percent at Toyota Motor Corp and 37 percent at Nissan Motor Co. Chrysler LLC sales were down 33 percent.
General Motors Corp, which was more aggressive in its discounting by offering an employee-price sale, posted a 16-percent sales decline. That was a narrower decline than analysts had expected, and it made GM the only major player to gain significant share in a collapsing market.
Across the board, auto executives said Americans had either walked away from vehicle purchases or been stymied by a lack of financing or requirements for larger down-payments.
The bleak sales results represent one of the earliest readings of the impact on Main Street from a now global credit crisis that has triggered a consolidation on Wall Street.
Toyota's sales decline was its steepest since 1987. The Japanese automaker's sales were down by over 40 percent in key regional markets, including California, where the drop in housing prices has hit consumers the hardest
As the stock market fell and the debate in Washington on a financial bailout raged this week, some buyers of Toyota's luxury Lexus models asked for deposits back.
"We saw the trend steadily decline," Toyota sales chief Bob Carter said of the uncharacteristically weak demand at the end of the month when sales normally peak at dealerships.
Ford also said the debate over the still-pending, banking bailout stopped buyers in their tracks by injecting a new note of uncertainty. "It was tantamount to a natural disaster," said Ford sales analyst George Pipas.
Ford's sales decline was deeper than analysts had expected, suggesting "continued pressure" on its share price, JP Morgan analyst Himanshu Patel said in a note.
Erich Merkel, an auto analyst and consultant with Crowe Horwath LLP, said it appeared Ford, the No. 2 U.S. automaker behind GM, had lost sales to its larger rival's employee price offer. "Those two tend to swap punches quite a bit," he said.
Shares of Ford fell almost 13 percent on Wednesday. GM shares were almost unchanged.
HEIGHTENED UNCERTAINTY
Some analysts and industry executives had held out hope that U.S. auto sales had hit bottom in August after a summer of wrenching declines tied to higher gas prices. Continued...
