U.S. Sales of New Cars and Trucks Plummet in October
Sales of new cars and trucks in the United States plummeted in October to levels not seen in the auto industry in 25 years.
The stunning fall-off affected all automakers, as shaky consumer confidence and the inability of many eager shoppers to get loans because of tight credit drove sales down 31.9 percent during the month compared with the same period last year.
The grim results — particularly for General Motors, whose sales dropped by 45 percent during the month — raised new concerns about the chances of survival for Detroit’s troubled Big Three.
The auto figures add to the steady march of statistics that suggest the broader economy is grinding to a slower pace. A measure of overall manufacturing activity in the United States fell last month to its lowest level in 26 years, according to data released Monday. The Commerce Department also said that construction spending fell for the eighth time in 10 months in September.
For the auto industry, analysts said the annualized sales rate for the month was the worst recorded since 1983, and few saw any hope for recovery in the industry before 2010.
The sharp decline will only further burden the Detroit companies, and may increase pressure in Washington to provide emergency financial aid to General Motors, Ford and Chrysler.
GM has been burning through an estimated $1 billion in cash each month since middle of the year, although some analysts believe that figure has grown substantially with the drastic drop-off in demand for new vehicles.
“If they can’t get any help, whether it’s through the government guaranteeing loans or getting a total bailout, we could definitely see one of them going bankrupt,” said Rebecca Lindland, an analyst with IHA Global Insight.
GM, which is pursuing a merger with Chrysler, was recently turned down by the Treasury Department for $10 billion in federal assistance. All three Detroit automakers are hoping for the release of $25 billion in low-interest loans from the Energy Department for the development of more fuel-efficient vehicles.
Sales of new vehicles had been declining throughout the year because of unstable gas prices, a weak economy and a tightening of credit by banks and other lenders.
Automakers reported total sales of 838,000 vehicles during October, the lowest total since January of 1992. However, the annualized selling rate in that month — a projection of full-year sales at the current rate — was a miserable 10.5 million vehicles, the worst since February of 1983, according to Ward’s Autodata.
Analysts said showroom traffic dried up during the month because of consumer fears about unemployment, continued declines in housing prices, and the aftershocks of the Wall Street financial crisis.
“Consumer confidence is the number one reason we are where we are,” said Jesse Toprak, chief market analyst for the auto-research Web site Edmunds.com.