U.S. September auto sales plunge; GM, Chrysler hit hard

By Kevin Krolicki and David Bailey

DETROIT (Reuters) - U.S. auto sales tumbled by 23 percent in September as showrooms emptied after the government-funded boom from the "cash for clunkers" program, with General Motors Co and Chrysler hardest-hit.

Sales for General Motors Co and Chrysler -- the two U.S. automakers struggling to regain momentum after emerging from bankruptcy -- dropped by 45 percent and 42 percent, respectively.

Ford -- the only U.S. automaker to have avoided bankruptcy -- managed to hold its sales decline to 5 percent from a year earlier despite low inventories and reduced incentives for car shoppers.

Automakers had braced for a sharp pullback in September after the clunkers program and taxpayer-funded credits of up to $4,500 drove sales sharply higher the month before.

The overall result was in line with those forecasts as industry-wide U.S. auto sales dropped 41 percent from August, according to Autodata Corp.

On the annualized basis tracked by analysts, industry-wide U.S. auto sales dropped to 9.2 million vehicles in September, the weakest sales rate since April.

In a reversal of fortune that underscores how deep the decline in U.S. auto sales has cut over the four-year-long slump, China's overall vehicle sales for September were almost twice as large as the industry-wide U.S. tally, according to an estimate provided by GM.

Meanwhile, U.S. sales for the three major Japanese automakers were also lower in September after gains in August during the short-lived cash-for-clunkers boom.

Honda Motor Co sales were down 20 percent in the month. Toyota Motor Co sales fell almost 13 percent. Nissan Motor Co sales were down 7 percent.

"The auto sales data is not so worrisome. Rather, the market is concerned about the health of the U.S. economy and for Japanese automakers, the yen's moves," said Kazuyuki Terao, chief investment officer at RCM Japan in Tokyo.

Shares of Japanese automakers fell on Friday in a sell-off of exporters following weak U.S. economic data, with Toyota losing 3.1 percent, Honda dropping 2.7 percent and Nissan down 3.8 percent.

"Consumer traffic at dealerships evaporated in the absence of the incentive program, which ended in August," Standard & Poor's equity analyst Efraim Levy said in a note. "However, we expect the September lull to be temporary, as the comparisons get easier and we see the economy improving."

Hyundai Motor Co, which has taken market share through the U.S. recession on a growing reputation for low-cost and high-quality vehicles, was the only big winner. Its sales jumped 27 percent in September.

Combined with its affiliate Kia, Hyundai now ranks as the sixth-largest automaker in the U.S. market, having outstripped Nissan over the first nine months of the year.

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