Ford pessimistic about auto sales
DEARBORN, Mich. -- Auto sales in October could hit the lowest levels since the early 1980s, says Ford Motor's head of sales analysis, and future months could go even lower.
"The next six to 12 months are going to be very, very challenging," George Pipas, Ford's U.S. sales analyst, said in a meeting with journalists at Ford's headquarters Friday. "And I mean this for the whole planet."
Industry auto sales will be released Monday afternoon, following nearly six weeks of lagging sales. Car sales cooled in mid-September when the credit crisis hit, and haven't returned yet, Pipas says. He says Ford still doesn't know if the market has hit its bottom.
October sales are expected to be down 30%, according to consumer website Edmunds.com. That would mark the 12th consecutive month of sales declines. October sales are expected to translate into an annual rate around the mid-11 million mark on an annual rate, down nearly 30% from the rate year ago.
Tight credit and weakened consumer confidence have beaten down car sales, which were already weaker this year due to high gas prices and deflated home values. Banks have been hesitant to lend to anyone with spotty credit, and the government's $700 billion financial assistance program hasn't yet resulted in freer credit markets. Sales for October are estimated to hit the mid- 11 million mark on an annual rate, down nearly 30% from a year ago.
For the year, cars will likely outsell trucks for the first time since 2000, Pipas says. That's a problem for the already beleaguered domestic automakers, because they make higher profits on SUVs and trucks.
Some analysts say it's possible Japan's Toyota Motor will surpass General Motors as the U.S. sales leader for the first time in history.
After reeling from a 32% drop in September sales, Toyota launched zero-percent financing on almost all of its models, and could post decent sales as a result. Meanwhile, General Motors' financing arm, GMAC, said it was tightening its lending standards to require a credit score of at least 700, potentially shutting out some buyers.
Furthermore, many people took advantage of the Detroit automaker's employee pricing offer that recently ended. The deal was credited with buoying August and September's results but likely stole sales from October, said Tom Libby, senior director for industry analysis at J.D. Power and Associates' Power Information Network.
"For GM this is going to be a difficult month," Libby said.
Globally, Toyota and GM have been neck-and-neck in the race to be the top vehicle seller, but the closest Toyota ever came to beating GM in the U.S. was in May, when Toyota sold 257,404 vehicles to GM's 268,990, according to Ward's AutoInfoBank.
Even as gas prices fall, demand for small cars remains high. Pipas says that's because gas prices are no longer buyers' primary concern. They're worried about jobs, their homes, and rising health care costs.
"I think we are heading into an era of minimalism, driven by economic necessities," Pipas says. Ford and other automakers need to figure out a way to make money off small cars, he says.