UPDATE 2-US auto sales on track for 17-yr low-JD Power
(Adds historical context, comment from Ford)
BIRMINGHAM, Mich., Oct 15 (Reuters) - J.D. Power and Associates, which tallies U.S. auto sales on a daily basis, sees October sales on track to hit the lowest level in 17 years with a sales rate below 12 million units.
If the October sales rate dropped below 12 million units, overall U.S. sales for 2008 could also drop below the 13.6 million units the forecasting firm has projected, a senior J.D. Power analyst said on Wednesday.
The last time U.S. light vehicle sales dropped below 12 million units was in April 1991, according U.S. Commerce Department data.
"The sad news that we've been getting month after month after month is likely to continue in October," J.D. Power economist Bob Schnorbus said in a presentation to industry executives and analysts.
"If we continue to see the weakness in the fourth quarter that we're seeing in October, we could end up having to take a few hundred thousand units out of our forecast."
U.S. auto sales have dropped to 15-year lows, battered since spring by factors ranging from the housing slump to higher gasoline prices to tighter consumer credit.
Some automakers had held out hope that the market hit bottom in August when U.S. sales were running at a 13.7 million-unit rate.
But global financial turmoil and the banking crisis that began with the collapse of Lehman Brothers Holdings Inc (LEHMQ.PK) caused consumers to pull back from showrooms in September. The sales rate dropped to 12.5 million units.
This week General Motors Corp's GM.N former finance firm GMAC announced that it would limit auto loans to consumers with credit scores above 700 in response to pressure on its own funding and higher costs.
"Will that ultimately lead to a decline in the market?" said J.D. Power global forecasting director Jeff Schuster. "It may. It may just be a market-share issue."
J.D. Power's Schnorbus said it was likely that the current quarter or the first quarter of 2009 would represent the bottom of the current downturn.
While tight credit and other economic negative factors would suggest U.S. auto sales could drift lower through the rest of the year, Schnorbus said it was likely that automakers would offer stepped-up discounts to clear out inventory in November and December.
J.D. Power now forecasts 2009 sales of 13.2 million units, but has also considered a worst-case scenario that would be driven by a deep global recession. In such a case sales would not begin a substantial recovery until 2010.
"Could it get much worse? Well, yeah. October is making us very nervous," said Schnorbus, who added, "Probably things are going to get worse before they get better."
Ford Motor Co's (F.N) global sales chief said this week that industrywide U.S. auto sales for October had continued at the low rate of late September.
Ford's Jim Farley said on Monday that the industry had seen a sales rate dipping below 12 million units in late September.
GMAC is now 51 percent owned by Cerberus Capital Management [CBS.UL], which also owns Chrysler LLC.
U.S. light vehicle sales for 2007 totaled 16.1 million vehicles. (Reporting by Kevin Krolicki; Editing by Brian Moss, Gerald E. McCormick, Richard Chang)
