Auto industry continues struggle

By Web Master


AP Auto Writer

DETROIT — Automakers began 2008 expecting the worst year for U.S. auto sales in a decade. So far, they’re getting what they anticipated.

Sales dropped by double digits in March, even for usual stalwarts like Toyota. And with fragile consumer confidence, falling home values, tightening credit and high energy prices, it may be some time before auto sales recover.

General Motors and Chrysler both reported a 19 percent drop in U.S. sales on Tuesday. Ford’s sales fell 14 percent and Toyota was down 10 percent compared with last March. Nissan fell 4 percent and Honda reported a 3 percent drop.

If the March sales rate held steady for the full year, U.S. sales would be 15.1 million units in 2008, according to Autodata Corp. That’s down from a rate of 16.2 million units last March, and the lowest monthly sales rate since October 2005, when a summer of heavy discounts hurt fall sales.

GM remained upbeat, saying demand is building up and the federal economic stimulus package could help boost sales in the second half of the year.

“We hope we are in the trough and we are now gradually coming back,” Mike DiGiovanni, GM’s executive director of global markets and industry analysis, said in a conference call.

The introduction of high-volume products this fall, including the new Ford F-Series and Dodge Ram pickups, also should boost sales. But most automakers seemed resigned to more tough times ahead.

“I’d like to be able to tell you that the worst is behind us, but I really can’t give you that assurance,” said Jim Farley, Ford Motor Co.’s sales and marketing chief. Farley said Ford is concerned the shrinking availability of consumer credit will hurt sales and that the second quarter could be more difficult than the first.

Bob Carter, general manager of Toyota Motor Corp.’s U.S. Toyota division, said the company is lowering its full-year sales forecast.

“The recovery in the second half of this year may not be as robust as we had originally hoped for,” Carter said.

Small cars fared best in March as consumers focused on fuel efficiency. Sales of the Ford Focus jumped 24 percent for the month, while Toyota’s subcompact Yaris saw sales rise 83 percent and Honda’s subcompact Fit surged 74 percent.

Ford and GM said consumers are choosing more fuel-efficient four-cylinder engines over six-cylinder options. Ford’s top U.S. sales analyst George Pipas said 70 percent of Ford Fusion buyers are now getting the four-cylinder engine for the midsize car, compared to 60 percent at this time last year.

Despite the bad news, auto shares rallied along with the market amid optimism that the worst of the credit crisis may have passed and the economy is faring better than expected. GM shares rose $1.10, or nearly 6 percent, to close at $20.15. Ford gained 25 cents to $5.97, Toyota’s U.S. shares added $2.39 to $103.28 and Honda’s U.S. shares were up $1.07 to $29.88.

The Associated Press reports unadjusted figures, calculating the percentage change in the total number of vehicles sold in one month compared with the same month a year earlier. Some automakers report percentages adjusted for sales days. There were 26 sales days last month and 28 in March 2007.