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U.S. Car Sales Plunge in March




Car Sales Collapse
By TCC Team
Filed: 4/1/08


Car sales in the U.S. dropped by as much as 19 percent in March, In keeping with recent, negative trends, Detroit’s Big Three all posted double-digit declines, but so did the import industry leader, Toyota, which had, until recently, been able to buck the market’s downward spiral.

Despite strong demand for its new Chevrolet Malibu, GM’s sales fell 19 percent, Ford’s dropped 14 percent, Chrysler declined 19 percent, and the normally solid Toyota’s tumbled 10 percent, reported the research firm Autodata.

Honda, Nissan, Mitsubishi, Mercedes Benz, BMW, Suzuki, Kia, Porsche and Mazda also posted sales declines according to Autodata, which noted that the most closely-watched industry indicator clipped to dangerously low levels, well below what even some automotive pessimists had been predicting. Dubbed the Seasonally Adjusted Annual Sales Rate, or SAAR, it’s designed to adjust for normal month-to-month variations in the market. The March SAAR dropped towards 15 million units, well under the 15.1 million to 15.3 million units bullish observers had forecast.

“There were red numbers all over the board,” observed Mark LaNeve, GM’s vice president of sales, service and marketing.

The only automakers to buck the trend were Hyundai, which posted a modest gain thanks to strong sales of its new Sonata, and Volkswagen of America, which ran an aggressive and expensive incentive campaign right through the month. VW sales were up almost 13 percent, according to the company’s sales report.

“I’d like to tell you the worst is behind us but I really can’t say that,” said Jim Farley, Ford group vice president of sales and marketing.

“The recovery in the second half of this year may not be as robust as we had originally hoped for,” added Bob Carter, general manager of the Toyota Division who added the Japanese auto giant was now in the process of revising its forecast for 2008.

Even Toyota, which had been seemingly invincible in recent years, admitted it was now sitting on an unheard of 100-day supply of full-sized sport utility vehicles and its supply of full-sized pickup trucks had climbed past 70 days. (The industry norm is around 60 days worth of vehicles.) Through the first quarter, Toyota’s U.S. sales have dropped 5.6 percent.

Reading past the gloom-and-doom, the March sales figures revealed some significant shifts in the American market, notably an accelerating the shift towards smaller vehicles and smaller engines, carmakers said.

“We’re seeing people trading down,” for the first time in a long time, said Steve Landry, Chrysler vice president of sales. Buyers are trading in vehicles like the Jeep Commander and Jeep Grand Cherokee for a Jeep Compass or Jeep Patriot, he said.

Landry said buyers have been rocked in recent weeks by a combination of higher credits costs, lower housing costs and higher fuel prices. “We’re seeing severe pressure on consumers,” he said.

George Pipas, Ford’s sales analyst, also noted that small cars have picked up about one full point of market share every year since 2004. Through the first quarter of 2008, however, sales of small cars have picked up two full points of market share this year and moving closer to 20 percent of the market.

Meanwhile, carmakers such as Nissan and Honda reported strong sales of their smallest vehicles and Pipas also said sales of Ford’s four-cylinder engines in cars such as the fusion are climbing rapidly.

Sales of Ford’s critical full-sized pickup truck slid 24 percent. GM pickup truck sales dropped 25 percent and Dodge reported a 31 percent drop.

In fact, LaNeve noted the month-long strike at American Axle has not had any impact on GM’s retail sales even though the company had lost more than 100,000 units of production during the walkout.

Landry also said the rising price of diesel fuel appears to have stalled sales of heavy-duty pickups, which are normally ordered with diesel engines.

Pipas said full-size pick up trucks also now account for 12 percent of total sales, which is 3 points lower than when sales peaked earlier in the decade. “In the early 1990s, pickup truck sales were about 9 percent of the U.S. market,” he added. “I don’t think they’ll get that low again,” he said.

Industry insiders noted that the sales slowdown is particularly severe in what had been two of the country’s strongest regions, until recently: California and Florida. Both have been especially hard-hit by the sub-prime crisis, which has led to a surge in home foreclosures and, even for more affluent motorists, a sharp reduction in the availability of home equity loans. Many motorists, in those markets, have turned to such tax-deductible loans, rather than traditional automotive financing, in recent years.

While normally strong markets, such as California, have been hard hit by current economic problems, Toyota’s Carter noted that things are looking notably better in mid-America, in a stripe from Texas to Illinois. By Joseph Szczesny with TCC Team
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Comments (5)
  1. BIG 3 DISASTER.
    Big overpaid people surprised!
    I can not believe that the multi millionnaires running the big 3 are surprised!Any 5 grader knows that the next 5yr or 10yr and maybe for a longer time;small and economical cars are the thing.
    I am not surprised HYUNDAI,NISSAN,HONDA AND TOYOTA ARE DOING GOOD.
     
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  2. QUALITY SELLS and that makes quanity!!
    Fat cats can also go back to being skinny bags of bones.
     
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  3. Detroit goes blithfully along making the wrong cars and ignoring global warming.
    They deserve to go broke.
     
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  4. Hey Palmer,
    Man made global warming is the worst scam scare ever foisted off on a guilable public. "An Inconvenient Truth" is packed with lies, distortions, and exagerations.
     
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  5. I wouldn't buy a new car today, unless I had to. Why? There are no fuel efficient cars on the USA market with hatchback or stationwagon hauling capacity other than a Toyota Prius. However, there are fuel efficient diesels & plug in hybrids on the horizon. With $4 gas comming to Calif. in a month ($4 diesel already here), fuel economy is a TOP priority for me! Plan on $5 or $6 a gallon gas in the near future & factor this into your next automotive purchace, I am! If enough of us do, maybe it won't happen.
     
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