CHICAGO (Reuters) - U.S. auto sales fell 34.4 percent in April as the industry held near the lowest levels in nearly 30 years and closed out the month with Chrysler LLC filing for bankruptcy protection.
The talk of bankruptcy surrounding Chrysler and General Motors Corp, which faces similar pressures, only spooked consumers last month and led to weaker-than-expected industry results, executives and analysts said.
“Clearly, the uncertainty, the bankruptcy talk, has really affected the entire industry,” GM chief sales analyst Mike DiGiovanni said on a conference call, adding retail sales had hit a wall in the last week of April.
U.S. auto sales came in at a 9.32 million seasonally adjusted annual rate in April, according to Autodata Corp, below the 9.8 million rate that analysts had expected. The annualized rate of U.S. auto sales is a closely watched indicator of economic activity.
That marked the 18th consecutive month of year-over-year declining sales and a drop from 9.86 million in March.
However, executives at several automakers also pointed to signs of stability in the market.
“While April sales weren’t much to call home about, there are signs that the sales contraction is nearing its end,” said Bob Carter, general manager of Toyota Motor Corp’s flagship brand in the United States.
Others called talk of a recovery wishful thinking.
“I don’t think it’s anything that can be characterized as a recovery until a bit down the road,” Frost & Sullivan auto analyst Stephen Spivey said. “The people I’ve talked to really aren’t looking for a rebound until next year.”
Chrysler, which shut down production on Friday as it began the first day of bankruptcy hearings, posted a 48 percent drop in sales, the largest among the major automakers in the U.S. market, followed by Toyota and Nissan Motor Co Ltd with declines of 42 and 38 percent, respectively.
Sales at U.S. automaker Ford Motor Co slid almost 32 percent last month, while sales at GM, which like Chrysler has been operating under federal supervision, fell 34 percent.
Honda Motor Co Ltd’s sales were off 25 percent.
“Wow, what a month in the last couple of days in the automobile business,” Ken Czubay, Ford vice president of sales and marketing, said on a conference call. “Clearly, we continue to operate in a very challenging economic environment.”
Ford officials said the U.S. economy appears to be reaching a bottom, citing rising consumer confidence [ID:nN01402214]. They expect a recovery in the second half of the year.
“At this point, grasping at straws, any signs that things are not getting worse ... is reason to be quite optimistic,” Edmunds.com analyst Jessica Caldwell said.
However, the weak demand led Chrysler, owned by Cerberus Capital Group, to file for bankruptcy on Thursday and announce an alliance with Italy’s Fiat SpA.
GM, surviving on $15.4 billion of government loans it received at the start of the year, faces similar pressures as it races to win sweeping cost cuts from bondholders and its major union by a U.S. government-imposed June 1 deadline.
U.S. auto sales typically account for as much as one-fifth of all retail sales in the country and represent one of the first indicators of consumer demand every month. Both GM and Chrysler have announced plant shutdowns to slash bloated vehicle inventories.
Ford officials said the automaker gained U.S. market share in April without boosting incentives to draw customers. The industry overall boosted such spending in April by an average of $600 per vehicle from last year, it said.
Ford, which posted a smaller than expected loss of $1.43 billion in the first quarter, is the only U.S. automaker not operating with emergency U.S. government loans.
But Ford is restructuring its operations and said last month it has been in talks with potential buyers for its Swedish brand Volvo, whose U.S. sales fell almost 37 percent.
GM said it also gained slightly in market share, while Toyota officials vowed not to match other automakers’ job-loss protection incentives.
GM and Ford shares closed off 5.7 and 4.9 percent, respectively, on Friday on the New York Stock Exchange.
Reporting by Ben Klayman and David Bailey, Poornima Gupta and Soyoung Kim in Detroit, editing by Matthew Lewis