Dealerships empty as all major automakers see sales plunge

DETROIT -- Fearful consumers avoided auto dealerships in October, sending U.S. sales to their lowest levels in more than 25 years.

Industry sales plummeted 31.9% from a year ago, according to industry tracking firm Autodata. Automakers sold just 838,156 new vehicles in October, the second consecutive month below 1 million. Until then, monthly sales had been more than 1 million since February 1993.

"Bottom line, there really needs to be action (to loosen credit) to allow our country to pull out of this very, very bleak period," said Mike DiGiovanni, GM's chief forecaster.

Every major automaker saw significant declines last month. If new cars and trucks were sold all year at October's pace, sales would be just 10.6 million in a full year, according to a seasonally adjusted index the industry uses.

Last year, 16.1 million were sold. Even in the deep auto recession of the early 1990s, automakers sold more than 12 million annually. For the year to date, Autodata shows sales down 14.6%.

October sales fell even as automakers boosted incentives. The deals continue this month, but unless confidence in the economy improves, rebates and loan deals won't have much impact, automakers and analysts agree.

"We had such a collapse of confidence in the month that anyone who could postpone the purchase of a car certainly tried to," says Dana Johnson, chief economist for Comerica.

Tighter credit held back some of those who did want to buy. Historically, 96% of new-vehicle purchases are credit transactions, and credit is harder to get. Also, deflated home values mean people can't tap their home equity to borrow for a new vehicle.

One bright spot: High fuel prices earlier this year dampened sales, but gasoline has collapsed to less than $2 a gallon in some spots, and that could help in the months ahead.