Auto sales suffer amid financial crisis
DETROIT (Reuters) - Automakers are expected to report that U.S. auto sales fell in September to about a 15- year low amid uncertainty over a potential Wall Street bailout and tight credit, which has made it more difficult for potential buyers to get car loans.
The expected drop in September would leave August's month- to-month sales increase as a one-month bump swamped by credit market paralysis that could confound industry hopes for reaching a bottom after a brutal three-year decline.
All major automakers are expected to report year-over-year sales declines, with U.S.-based General Motors Corp GM.N, Ford Motor Co (F.N) and Chrysler CBS.UL posting deeper declines than Toyota Motor Corp (7203.T), Honda Motor Co Ltd (7267.T) and Nissan Motor Co Ltd (7201.T).
"After a modest sales rebound in August, auto sales are likely to lose momentum in September on tighter credit conditions and nervousness over the broader financial crisis, despite high levels of vehicle incentives," Citigroup analyst Itay Michaeli said in a note to clients.
The average forecast is for U.S. auto sales to drop to a 13.5 million annual rate in September from a 16.2 million rate a year earlier and down from a 13.7 million rate in August, according to contributions from economists to Reuters.
The annualized sales rate is a key U.S. economic indicator and one of the earliest pieces of information economists will get to gauge the impact on big ticket item sales since the credit crisis began and the government embarked on an effort to bail out the rapidly consolidating financial sector.
The forecasts for the annualized rate of sales ranged from 12.5 million to 14.1 million for the month.
"They are going to be really ugly," George Magliano, director of auto research for North America at Global Insight, said in an interview. "We are talking something like 13-13.5 million units on a running rate and it could even go lower than that."
Auto executives said earlier in 2008 that a sharp rise in gas prices accelerated a shift in consumer demand toward more fuel efficient cars and away from large trucks and SUVs.
But in recent months, executives have said a lack of available credit has supplanted gas prices as a reason for sales declines and most now look beyond 2009 to 2010 for a potential rebound in sales.
SLOW SALES DEEP INTO 2009
"Traditionally, October sales are even worse than they are in September, so we don't likely have much to look forward to next month," said Jesse Toprak, executive director of industry analysis for Edmunds.
Edmunds expects sales to drop an unadjusted 19.7 percent from a year earlier and to decline 15.7 percent from a month earlier.
Global Insight also does not expect any sales recovery in 2009, Magliano said. Global Insight expects 2009 sales of about 13.4 million cars and light trucks, down from about 13.8 million this year.
U.S. auto sales were down 11 percent year-to-date through August, which marked the 10th consecutive month of declining sales on a year-over-year basis, the longest streak since the 2001 recession.
GM Chief Executive Rick Wagoner told reporters last week that September U.S. auto sales appeared no better or worse than August. He also held out hope demand would be supported if the industry receives federally backed low interest loans, tax breaks and a banking bailout.
The U.S. Congress has approved $25 billion of low-interest loans intended to support U.S. auto industry investment in advanced fuel-saving technology.
Ford marketing chief Jim Farley said last week the industry rate was likely to be about 13 million in September, the approximate running rate the automaker expects for the rest of 2008 under the tight consumer credit conditions.
Some analysts expect the seasonally adjusted annual selling rate to be below 13 million vehicles. Citi expects U.S. auto sales at a annual rate 12.7 million, just above the 12.55 million rate in July that was a 16-year low.
Citi expects sales weakness across all the major automakers in September. GM may outperform Ford and Chrysler due to its employee discounts campaign, which supported sales in late August and extended through September, Citi said.
JP Morgan has also been looking for an annualized sales rate slightly below 13 million vehicles.
On an unadjusted basis, Edmunds sees Chrysler posting a 36.5 percent drop, Ford a 25.4 percent drop and GM a 23.9 percent drop. It expects Toyota to drop 17.5 percent, Nissan to be 11.5 percent down and Honda to fall 6.1 percent. September had 24 selling days, one fewer than September 2007.
(Editing by Patrick Fitzgibbons and Andre Grenon)
