2008 U.S. Auto Sales Are Worst Since 1992By Michelle Krebs January 5, 2009
By Michelle Krebs and Bill Visnic
U.S. auto sales continued their precipitous tumble in December, closing the books on the industry's worst year since 1992.
Five of the Big Six automakers -- General Motors, Ford, Toyota, Nissan and Honda -- saw sales slide another 30 percent each in December; Chrysler's plummeted 53 percent. No automaker showed higher sales December to December. The lucky ones saw mere single-digit dips.
For the full year of 2008, all of the Big Six automakers reported sales declines. In total, the industry sold 13.2 million vehicles for an 18 percent drop from 2007's 16.1 million.
"It was an unbelievable year -- not one I want to repeat," said Mark LaNeve, GM's head of sales and marketing in a conference call with reporters. "Hopefully, 2009 will improve from December's low point rather than deteriorate as 2008 did."
Indeed, the deterioration in auto sales throughout 2008 was nothing short of stunning. Ford's top sales analyst George Pipas notes first-quarter 2008 sales ran at a 15.6 million annual sales rate. By the second quarter, as gas prices began climbing and housing values fell, the rate dropped to 14.6 million. The third quarter -- the quarter in which Lehman Brothers failed and credit froze -- saw yet another 1 million unit drop in the sales rate to 13.1 million. The fourth quarter closed at a rate of 10.6 million units.
Can We See Bottom Yet?
"Have we bottomed out yet?" asked Ford's Pipas rhetorically. "I don't know. Ford doesn't know. Bright people in Washington don't know."
In fact, many signs are discouraging. On the day the auto industry announced its dismal sales for 2008, President-Elect Obama, on his first day back in Washington, warned the economy was worsening. Economists expect growth to continue to be negative and the jobless rate -- the newest numbers to be announced later this week -- to continue climbing in 2009. Housing prices -- a must for a recovery -- remain weak.
Auto executives and analysts see no reprieve to declining sales at least in the first quarter. January and February, traditionally the lowest sales months of the year, are expected to be particularly bad for automakers this year. Edmunds.com's Toprak estimates U.S. sales in January could a "miserable" 550,000 vehicles. For the past decade, 1 million industry sales have been the norm for January.
Still, the most optimistic say the industry hasn't hit rock bottom yet -- but it is in sight. While still extremely weak, the auto industry patient is stabilizing. Sales month to month versus year over year are stabilizing. December's Seasonally Adjusted Annual Rate (SAAR) for sales, according to Ward's Auto calculations, came in at 10.27 million vehicles. That was a slight edge upward from November's 10.14 million, though it came at a price as automakers offered the richest incentives of any December on record, according to Edmunds.com's analysis.
"Record high incentives averaging $2,900 a vehicle showed the desperation of automakers, domestic and Japanese," said Jesse Toprak, Edmunds.com's executive director of industry analysis. "Toyota's incentives hit $2,000 a vehicle -- twice the amount it spent in December 2007."
The hefty incentives were required to rid automakers of the leftover 2008 models on their lots. Toprak noted that 40 percent of the vehicles sold in December were 2008 -- not newer 2009 -- models. In December 2007, only 19 percent of December sales were of leftover models.
Another sign of vehicle sales achieving a more normal equilibrium was a year-end hike in truck sales, thanks to lower gas prices, beefy incentives and snowy weather across the country.
As a result, the Ford F-Series pickup maintained its spot as the nation's best-selling vehicle for more than three decades. Its long-held sales crown had been threatened earlier in the year as industry truck sales plummeted in reaction to $4 a gallon gas -- and sales of small cars surged. The Chevrolet Silverado ranked 2nd in total vehicle sales, according to Ward's Auto.
Despite the late-game moves by trucks, cars outsold trucks sales in 2008 for the first time since 2000. The Toyota Camry was the nation's best-selling car, and 3rd in overall vehicle sales, according to Ward's Auto. The Honda Accord, Toyota Corolla/Matrix, Honda Civic and Chevrolet Impala followed.
"I think there is some cause for optimism as we move into 2009, especially in the second half," said Mike DiGiovanni, GM's executive director of global market analysis.
A new incoming administration has adopted a pull-out-the-stops attitude toward fixing the economy. President-Elect Obama's economic stimulus package promises to put people to work and money in their pockets. Continued low gas prices also are keeping money in consumers' pockets. Actions taken last fall by Treasury Secretary Hank Paulsen should soon yield the loosening of credit.
"The sooner stimulus efforts find their way to where they'll do the most good -- into the hands of consumers -- the sooner we'll see a turnaround in confidence levels and a return of buyers to the marketplace," said Toyota Motor Sales President Jim Lentz.
And the fact of the matter is a recession cannot last forever.
Far From Normal
Still, while the bottom may be in sight, breaking out the champagne in celebration is premature.
Edmunds.com forecasts full-year 2009 sales to total 12.3 million vehicles, still lower than 2008. "We see the first half of 2009 running at an 11 million SAAR and the second half at 12 million to 13 million," he said.
Similarly, GM is sticking to the 2009 forecast it provided to Congress in its viability plan to obtain federal bridge loans. That forecast calls for a baseline of 12 million vehicle sales in 2009 with a downside of 10.5 million. DiGiovanni said GM is "fine tuning" its forecast for Chapter 2 of its viability plan required by March 31. But he expects little change.
General Motors: Bad Year, Better December
GM sold 221,983 vehicles in December, down 31 percent from a year ago. According to Edmunds.com's calculations, GM had the best November-to-December sales improvement of the Big Six automakers with December sales 43 percent higher than November sales. GM's December market share was 25 percent, the highest level in months.
"Given the ongoing challenges and the difficult market environment, we were very encouraged to see a volume rebound for GM in December compared with both October and November," said GM's LaNeve.
For the year, GM sold 2,980,688 vehicles, down 23 percent. GM's market share for the year edged downward to 22.6 percent. Still, GM outsold Toyota -- its nearest competitor -- by 760,000 vehicles.
Hummer, which has been put up for sale by GM, suffered the biggest decline of all GM's brands with sales plummeting 51 percent -- its lowest sales level since 2002. In fact, all of GM's truck products posted year-over-year declines.
Every GM division reported a sales decline of 20 percent or more in 2008 from 2007: Buick, down 26 percent; Cadillac, off 25 percent; GMC dropped 26 percent; Pontiac slid 25 percent; Saab declined 35 percent; and Saturn fell 22 percent.
Relatively speaking the Chevrolet brand fared best among GM's brands with sales down 20 percent, a tad higher than the industry's decline. Still, total Chevy sales of 1.8 million vehicles marked the first time since 1992 that the division's sales fell below 2 million. The Malibu was the marque's highlight with sales up 39 percent in 2008.
The Cadillac CTS and Pontiac Vibe, both redesigned in 2008, posted higher sales as well -- the CTS was up 3 percent, the Vibe 25 percent.
Ford: Increase in Share, but Sales Not Bright
Market share at Ford Motor Co. increased in December and was up for the three consecutive months of the fourth quarter, but market-share gains ran scant interference for the bare sales numbers: Ford's total sales were down 20.7 percent for the year, closed out by a heavy 32.4 percent drop in December.
The numbers included a withering 31.2 percent decline for Ford's Volvo Cars unit in 2008, whose total sales cascaded to just 73,102 units for the year.
The Ford brand itself recorded a 19.7 percent sales decline in 2008 -- including a bulging 33.1 percent decline in December.
Lincoln rallied to a 18.4 percent year-to-year drop after a comparatively successful 10.1 percent sales decline in December. But Ford's Mercury brand endured a 28.6 percent decline for 2008, after a 29.8 percent dip in December that nonetheless included a 41 percent sales jump for the Mariner compact crossover -- one of just three models in the entire Ford family to post a sales increase in December.
For the year, only three models in Ford's entire product range had sales that wound up on the positive side of the ledger: the Focus compact car (13.1 percent improvement) and the low-volume C-series models from Volvo; the C30 coupe (105.7 percent gain) and C70 hardtop convertible (plus 22.5 percent).
Most symbolically battered for the year were Ford's once-dominant SUVs. The Explorer sank to a year-to-year decline of 43.1 percent -- and finished 2008 with a mere 78,439 units sold. The full-size Expedition rang in with a 38.9 percent drop for 2008. Results for both included sales dips of nearly 50 percent in December: a 49 percent dive for Expedition and a 50.9 percent plunge for Explorer to a dismal 5,346 units.
Other notable Ford-brand full-year sales results included a 32.2 percent dive for the Mustang, a 45.1 percent plunge for Taurus X and a 14.9 percent dip for the Edge crossover that included an outsized 56.7 percent drop in December.
And what of trucks? Even after the late-year injection of the redesigned F-Series, the line recorded a full-year sales decline of some 25.4 percent. December F-Series sales, which included the new '09 model, sank 24.5 percent anyway.
While Ford's numbers-crunchers crowed about practically eliminating the inventory of old-model '08 F-Series pickups (certainly an accomplishment in the past year's economic environment), Jim Farley, group vice president for marketing and communications, also admitted that most of Ford's market-share gains of the fourth quarter were "based on the sell-down of the '08 F-Series."
Meanwhile, Ford's Pipas said year-end figures indicate passenger cars will have slipped by light trucks to regain a slight dominance in market share. He said the projected 51 percent ratio of car sales marks the first time since 2000 that cars will outsell trucks. More important, perhaps, Pipas also said Ford does not expect trucks to regain the sales majority anytime soon, as the U.S. vehicle market continues to trend toward more fuel-efficient options.
Chrysler: A Lump of Coal
Santa brought Chrysler LLC a lump of coal in the form of December vehicles sales that plunged 53 percent and into five-figure territory at 89,813. Chrysler's total sales for 2008 fared only somewhat better at 1,453,122 units - a 30-percent decline from 2007.
For the year, only two Chrysler models posted positive results: the Jeep Patriot compact crossover (38 percent gain) and the Viper supercar (169 percent gain). With enthusiasts anticipating Viper's discontinuance, it was the only Chrysler model to gain in December, as well, discounting the paltry number of Journey midsize crossovers Chrysler sold late in 2008 to provide an outsized 3,822 percent gain compared to this December.
Chrysler's total of just more than 1.4 million units sold for the year is the lowest total in the Edmunds.com data archives, which date to 1991. The total places Chrysler well behind its domestic rivals General Motors Corp. (2,980,688 units sold) and Ford (1,988,376), not to mention Toyota Motor Corp. (2,217,662), while topping Honda Motor Co. Ltd. (1,428,765) -- which has long nipped at Chrysler's heels -- by a mere 25,000 sales.
The past year was "two pieces that made one year," said Jim Press, Chrysler's president and vice chairman. Press said the first six months of 2008 "were fairly normal" and sales and production met or even slightly exceeded Chrysler's targets. But as is now patently well-known, the second half of 2008 savaged the auto industry -- particularly the domestic automakers and their captive finance divisions.
The ability to offer consumers viable financing options "continues to be our biggest issue," said Press in a conference call with journalists and analysts.
For 2009, Press and other Chrysler executives said the approval of federal loan guarantees of some $4 billion are sufficient to see the company through what they anticipate will be a rough first quarter.
"We're hoping for the best," said Press, "but we're prepared for the worst case."
The "best" certainly didn't materialize in 2008 or in the last month of the year, which savaged Chrysler's sales figures. Except for the above-mentioned vehicles, every model in the Chrysler product range recorded double-digit declines -- both in December and for the year.
Apart from the two models with positive year-over-year sales results, the best of the rest were the Chrysler Town & Country minivan (-14 percent for the year) and the Dodge Caliber (17 percent) and Charger (-18 percent).
Chrysler's worst year-over-year declines (for vehicles other than those previously announced as being discontinued) included the Jeep Grand Cherokee (-39 percent and 73,678 total sales), the Dodge Dakota (-49 percent and 26,044 sales in 2008), and the Dodge Caravan (off 30 percent for the year). And one that is particularly hurtful: the seminal Chrysler 300 full-size sedan, which ended the year down 48 percent at just 62,352 units moved, versus last year's robust 120,636 sales.
In December, there were some precipitous plunges, including declines of 63 percent for the 300, 81 percent for the PT Cruiser, 63 percent for the Jeep Compass, 67 percent for the Dodge Caliber compact car and 75 percent for the Dodge Avenger coupe.
By division for 2008, Chrysler was down 38 percent, Jeep off 30 percent and Dodge was down by 26 percent.
"Last year, Chrysler and all of our stakeholders persevered through extraordinarily difficult economic conditions, made the necessary adjustments and always kept our focus on serving our customers," concluded Press in a statement "As a result, our company and our dealer network start this year stronger and better positioned to succeed in today's marketplace."
Toyota: Even Prius Beaten Down in 2008
For all who believed Toyota Motor Corp. to be the industry's irresistible force, its hybrid-electric Prius the model everyone must emulate, don't look now, but neither could bludgeon through 2008's immovable object: the U.S. financial meltdown.
Toyota and the Prius both endured sizable chinks in the armor, with Toyota recording a 15.7 percent full-year sales decline -- 2,217,662 units -- versus 2007 and sales of the efficiency totem Prius fading a significant 12.6 percent despite consumers' memory of a summer that saw $4-per-gallon gasoline. Prius' 2008 final sales number of 158,884 units is not insignificant, however, and Toyota said it moved a total of 241,405 hybrids in the U.S.
The Toyota division (-15.7 percent) had its worst year since 2005, the Lexus premium channel (-21.2 percent) its worst since 2003 and the Scion unit -- which might have been expected to make hay with its less-expensive and more-economical model range -- posted its worst performance since 2004.
Toyota's biggest car losers for 2008 included the Avalon full-sizer (off a resounding 41.5 percent); the Scion tC with a 36 percent full-year decline and Lexus' flagship, the LS, which slid 42.7 percent to just 20,255 units.
There also were outsized full-year declines in Toyota trucks and crossovers, the most notable being the 30 percent plunge for the full-size Tundra pickup, to a total of 137,249 sales. Joining Tundra in double-digit full-year slides were the FJ Cruiser (-48.2 percent), 4Runner (-45.6 percent) and even the RAV4 (-20.9 percent). Curiously, only Toyota's expensive full-size SUVs held their ground, with the Land Cruiser posting a 16.5 percent gain (3,801 units) and Sequoia ringing up a hefty 31.5 percent increase, with 30,693 sales.
Toyota's lone volume-market winner was the Yaris subcompact, up 20.3 percent for the year. The Scion xD held its own with a large 151.9 percent gain, but measured against just 10,948 units for all of last year.
Meanwhile, the midsize-market gold-standard, Camry, took an 8 percent hit in 2008, although the number is relative: any automaker would gladly accept the Camry's 436,617 sales. And despite lukewarm early reaction, Corolla, too, posted a fine 351,007 tally for 2008, the number itself representing a 5.8 percent drop-off from 2007.
December was its own special blizzard, damping total Toyota sales some 36.7 percent, including a 41.8 percent plunge for Lexus and a 39.7 drop for Toyota SUVs.
In December, Tundra plummeted 52.2 percent to just 9,191 units and every Lexus car model dropped at least 34.6 percent. The only model in the entire Toyota product range to post positive results in December were the Lexus LX (284.8 percent gain on 508 units)
Toyota pointed to projected U.S. economic stimulus initiatives to improve sales prospects.
"Our New Year's resolution is to shift the focus back to where it belongs, to the consumer," said Toyota's Lentz in a statement.
"The sooner stimulus efforts find their way to where they'll do the most good -- into the hands of consumers -- the sooner we'll see a turnaround in confidence levels and a return of buyers to the marketplace.
Honda: Lowest Sales Year Since 2004
For the first nearly three-quarters of the year, it appeared that American Honda, with sales of its small cars booming as gas prices soared, would buck the trend of declining sales. But by year-end, Honda was in the same boat as the rest of the mainstream automakers.
For 2008, American Honda, including both the Honda and Acura brands, sold 1,428,765, a decline of 8.2 percent from 2007 daily sales rate, better than the industry's double-digit average decline but still Honda's lowest level of sales since 2004.
For December, Honda's slide was in line with the rest of the industry. The automaker sold 86,085 vehicles, a decrease of 34.7 percent. By Edmunds.com's analysis, that was up 26 percent from November.
"American Honda's sales mirror the industry's current condition," said Dick Colliver, executive vice president of American Honda Motor Co., Inc. "We believe Honda will be in a strong position when the market stabilizes."
Honda Division sold 1,284,261 vehicles in 2008, down 6.7 percent from 2007. Car sales edged 1 percent higher, setting the fourth consecutive record for a year. Honda truck sales fell 16.9 percent.
But Honda's popular models closed the year with mixed results. Accord and CR-V sales closed the books with lower sales; Fit and Civic posted increases. And the Pilot, redesigned for 2008, never gained momentum, posting sales down 17.7 percent for the year.
Acura was a drag on American Honda all year. The luxury marque ended the year selling 144,504 vehicles, down 20 percent. December Acura sales were off 39.3 percent. The redesigned TL led the division in sales, followed by the MDX -- the previous best-selling Acura in 2007.
Jessica Caldwell, Edmunds.com's director of pricing and industry analysis, provided the analysis for this report.