U.S. Auto Sales on the Road to Nowhere

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    NEWSLETTERS

    TK
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    MIAMI - DECEMBER 02: MIAMI- NOVEMBER 2: Ford pickups sit on the sales lot at the Metro Ford dealership December 2, 2008 in Miami, Florida. Ford announced that its November sales declined to 123,222 units, from 177,485 a year ago, a 30.6 percent drop. (Photo by Joe Raedle/Getty Images)

    Ford Motor Co.'s U.S. sales plummeted 32 percent in December and Toyota Motor Corp.'s fell 37 percent as car and truck buyers continued to steer clear of showrooms due to the dismal economy.

    Ford's sales for 2008 fell 21 percent from a year earlier, keeping the Dearborn automaker in third place in the U.S. auto sales race, falling behind Japan's Toyota for the second straight year.

    Toyota's 2008 sales fell 16 percent to 2.22 million, compared with Ford's 1.98 million.

    Other automakers are to report U.S. sales for December and the full year later Monday, and analysts expect an industrywide drop of up to 40 percent as consumers remain uncertain about the economy and their jobs.

    Subaru of America Inc. said its U.S. sales crept higher in 2008, poising the Japanese company to be the only major automaker with a yearly sales increase. Subaru's U.S. sales rose by 0.3 percent to 187,699 vehicles from 187,208 in 2007, as consumers snapped up its top-selling Forester and Impreza models.

    Ford said it sold 138,458 light vehicles last month, down from 204,787 in December 2007. But even though its sales were dismal, Ford said it expects to fare better than the industry overall.

    The auto Web site Edmunds.com predicted sales for the full year will total just over 13 million, down 18 percent from 2007 and the lowest level since 1992.

    Poor industry sales continue to mean good deals for consumers, though. Aaron Bragman, automotive marketing research analyst for IHS Global Insight in Troy, Mich., said large incentives such as zero percent financing and rebates will continue well into 2009 as automakers try everything they can to boost sales.

    Full-size truck incentives ran from $7,000 to $8,000 in December, and Bragman expects that to continue all year as the economy fails to improve.

    "You look in the paper and the deals on brand new GM pickups are astonishing," he said. "The discount that you get buys a heck of a lot of gasoline."

    One automaker, Hyundai Motor America, is trying to woo skittish buyers by promising to let them return cars free for up to a year if they lose their jobs and can't make the payments.

    The "Hyundai Assurance Program" applies to customers stricken by misfortune outside of their control, such as losing their job, becoming disabled or losing their drivers license for medical reasons. It covers depreciation up to $7,500.

    Similar bold moves might be necessary throughout the year. Global Insight predicts that U.S. sales will drop from 13 million in 2008 to 10.3 million this year as the economy continues to sputter.

    While that may bring deals for consumers, it's bad news for the automakers. General Motors Corp. and Chrysler LLC were forced to go to the government for loans to hold off bankruptcy, and Ford says it may need government money if sales don't recover in 2009.

    But Bragman said the sales drops are not unique to the U.S.-based automakers.

    "This is a domestic market problem because we see the same kinds of declines at Toyota and Honda as we see at GM and Ford," he said. "It's not a matter of getting financing. It's a matter of getting shoppers."

    Toyota said it sold 141,949 vehicles in December, down from 224,399 a year earlier.

    Ford said it sold 43,087 Ford, Lincoln and Mercury cars last month, down 26 percent from December 2007. The company sold 90,418 Ford, Lincoln and Mercury light trucks in December, 34 percent fewer than the same month a year earlier.

    George Pipas, Ford's top sales analyst, predicted that passenger cars will outsell trucks in the U.S. this year for the first time since 2000 as consumers continue to be wary of high gasoline prices.

    Ford said there was a glimmer of hope in its sales figures. Its market share was 14.6 percent, up 0.7 percentage point from December 2007 and the first time since 1997 that the company has seen its share go up three straight months.

    It also sold 195,823 Focus compacts in 2008, the highest total since 2004 and a 13 percent increase from 2007.

    "This is a strong ending to end a very challenging year," Jim Farley, Ford's group vice president for marketing, said in a statement.