U.S. July auto sales spiral to 16-year low
DETROIT (Reuters) - U.S. auto sales plunged to a 16-year-low in July, led by a 27 percent drop at General Motors Corp (GM.N), as high gas prices and tight credit sent the industry into a tailspin.
The sales decline was steeper than analysts had expected and showed an accelerating downturn in the world's largest vehicle market as Americans abandoned the SUVs and trucks they had favored for more than a decade.
July sales marked the ninth straight month of declining sales in the U.S. auto market, making it the longest such downturn since the 2001 recession.
Automakers struggled to meet demand for fuel-efficient small cars and hybrids, only to see those gains wiped out by a 25 percent drop in sales of light trucks in July.
Ford Motor Co (F.N) sales were down 15 percent. Toyota's sales fell 12 percent.
Nissan Motor Co Ltd (7201.T) surprised investors by posting an 8.5 percent increase. Honda Motor Co Ltd (7267.T) reported a weaker-than-expected 1.6 percent drop in sales, but outsold Chrysler for the third straight month.
The results cast a pall over Detroit's struggling automakers as they grapple with diminished cash holdings and the costs of a downturn now widely expected to run into 2009.
GM's showing came as the No. 1 U.S. automaker posted a $15.5 billion quarterly loss, attributable to a combination of meager sales and writedowns in its auto finance business.
U.S. auto sales fell to a seasonally adjusted, annualized rate of 12.55 million units in July, the worst showing since April 1992.
"We are in a period that feels a lot like 1991 and 1992 and we had similar issues with a recession at that point in time, high oil prices and fear of oil supply shortages," said GM's sales analyst Mike DiGiovanni.
TOUGH ROAD AHEAD
Auto executives and analysts were unwilling to call a bottom for sales.
They noted there were signs that tougher credit markets and a pullback from cheaper vehicle lease financing could weigh on sales for months to come.
Chrysler LLC, which boosted incentives on its vehicles in August, has completely abandoned leases. GM and Ford have tightened consumer credit terms.
"For the next several months, and I would say for the next year, the credit situation that customers are facing in dealerships will take center stage," Ford's sales and marketing chief Jim Farley said. Continued...
