Plummeting consumer confidence and soaring gas prices wreaked havoc on auto sales last month, capping the industry's worst first quarter in a decade, analysts said Tuesday.
Overall, auto sales in March were down 12% from March last year. Among major automakers, only Volkswagen and Hyundai showed increases, Autodata reported.
If automakers sold cars and trucks the entire year at the March pace, the annual tally would be 15.1 million, Autodata says, worst since 14.8 million in 1995. The 2007 March pace was 16.3 million.
Chrysler took one of the hardest hits, with a 19.4% drop, followed by Ford Motor f, down 14%, and General Motors gm, down 18.7%. Even powerhouse Toyota tm wasn't immune, with a fall of 10.3%. The figures look worse in part because there were two more selling days in March 2007.
Vehicle sales are off 8% since the start of the year, according to Autodata.
"I'd like to tell you the worst is behind us, but I can't give you that assurance," said Ford Group Vice President Jim Farley. Because of a "very challenging market," the "second quarter may be worse than the first." GM and Toyota both forecast a slight recovery for the industry in the second half of the year, boosted by the Federal Reserve rate cuts.
Analysts blame lower sales on falling consumer confidence, eroding home prices (and less equity to tap for loans), tighter credit and a debt hangover facing many families.
"Consumers are going through a real erosion of wealth. If you've lost 20% of your house value in the past year, you're not going to be in a cheery mood to go buy a new car," said Jesse Toprak, industry analyst for Edmunds.com.
He added that the first quarter saw the industry's worst sales performance since the same three months in 1998. "We're in a car sales recession if we aren't in a general recession," said Burnham Securities analyst David Healy.
Gasoline prices played a huge role. On Tuesday, regular gas averaged $3.29 a gallon, a tenth of a cent off the record set the day before, according to AAA.
As a result, car sales were off 3.1% in the first quarter vs. 12.1% for pickups and SUVs, and that amplified the impact of the sales drop on automakers.
"The worst-selling vehicles are the most profitable," Healy said.
At Ford, its small Focus is selling not only strongly, but at significantly higher prices than a year ago, Farley said.
Likewise for GM's new Chevy Malibu sedan, said GM Vice President Mark LaNeve. The "silver lining" of the downturn is a chance for GM to regain market share in cars and crossovers, sectors where it lost ground during the SUV craze, LaNeve said.
Toyota says its tiny Yaris, Scion xB and Prius and Camry hybrids were winners. But overall, the results show that "Toyota is not immune from the economic cycle either," said Bob Carter, general manager of Toyota's U.S. sales operation.
Most makers so far aren't boosting inducements to move sluggish sellers. Incentives averaged $2,519 a vehicle in March, virtually unchanged from February and up only 3.9% from March last year, Edmunds.com said.
Consumers are "buying more efficient vehicles — or postponing purchases," Toprak said.