Detroit - Offers of huge rebates and tempting low-interest loans weren't enough to entice car buyers out of their bunkers in this economic crisis, causing US auto sales in February to hover near historic lows.
General Motors' sales tumbled 53% from a year earlier, while Ford's US sales fell 48% and Chrysler's dropped 44%. The major Japanese automakers fared only slightly better.
Overall auto sales were down 41% from February 2008, but up 5% from January, according to Autodata and Ward's AutoInfoBank. January marked the industry's worst monthly performance since December 1981.
The increase was a good sign, but it's far less than the usual 14% sales bump from January to February, and it doesn't necessarily mean sales have hit the bottom, said Jesse Toprak, executive director of industry analysis for the auto website Edmunds.com.
"It does mean that there's some life out there," Toprak said.
Things are so bad that GM, which marked its worst February sales since 1967, is considering a programme to let buyers keep their cars for a time without making payments if they lose their jobs.
The huge stock market decline helped push down sales, said Mark LaNeve, GM's North American vice president of sales, services and marketing. The Dow Jones industrial average ended the month at its lowest level in nearly 12 years.
In no mood to splurge
"People are seeing, tracking their investments going down 3%, 4%, 5% a day or a week," LaNeve said. "That doesn't put you in a mood to go out and splurge on a new vehicle."
Automakers sold 688 909 cars and trucks last month, and there's little they can do to spur sales until the economy recovers, Toprak said.
"You can spend money on marketing or incentives. That's all you can do," he said. "Neither is having a big impact on sales. That tells us it's really consumer confidence and the general negative state of the economy overall causing consumers to postpone making purchase decisions."
According to one figure closely watched by the industry, February's annualised sales rate was the lowest in more than 27 years, dropping to 9.1 million vehicles. That figure makes adjustments for seasonal sales fluctuations.
Toyota's sales fell 40%. The global auto sales leader was forced to seek aid from the Japanese government on Tuesday for its finance arm.
Automakers and analysts have been predicting sales will rebound in the second half of this year, but they are becoming less certain. As recently as January, they were predicting that US sales this year would total around 11.5 million vehicles, but as the economy has worsened, they have lopped off a million or more sales from their estimates.
The incentive GM is considering would be similar to Hyundai's "Assurance" programme, which helped it buck the double-digit sales decline with only a 2% drop last month. The South Korean company's programme allows buyers to return a vehicle within a year if they can't make the payments due to a misfortune such as job loss or disability.
Incentives
LaNeve said a GM plan might be more useful to reassure buyers.
"We're not crazy about the Hyundai programme because all it really does is keep your credit from getting wrecked," he said on Tuesday. "You lose your job, you have to turn your car in. If you lose your job, you need your car, right? How are you going to get a new job?"
GM is trying to fashion a programme that's more consumer friendly but hasn't figured one out yet, he said.
Ford's top economist said retail sales to individuals had been stable for four months but dropped last month, indicating this may not be the bottom.
Ford's forecast still calls for a modest second-half recovery as economic stimulus measures take hold, economist Emily Kolinski Morris said.
Those who do buy are more often opting for a used car or truck. Edmunds' data show that 27% of people who intended to buy a new car in February switched to used at the dealership.
There is hope for a rebound, however. Rising used car prices are an indication that new car sales may be near the bottom, because more people will opt for new cars when they see they won't save as much by buying a used vehicle.
Higher values also make dealers more likely to take trade-ins on new cars, which could move the market to "a more natural balance between new and used," said Ken Czubay, Ford's vice president of US sales and marketing.
Industrywide, the average incentive per vehicle last month rose 8% from January to $2 914 per vehicle sold, Edmunds said. Incentives climbed to an average of 20% of the sticker price of a new car, and they topped more than $10 000 on some vehicles.
Incentives vary be region, but buyers were getting an average of $8 504 in rebates and subsidised financing on the Cadillac XLR sports car, while incentives averaged $8 355 on the Dodge Ram 3500 pickup and $8 144 on the Infiniti EX-35 crossover, according to Edmunds. Some vehicles left from the 2008 model year had higher incentives, including cash to dealers that often got passed on to customers, Toprak said.
The latest sales slide casts further doubt on the financial viability of GM and Chrysler. They need to sell cars and generate critical cash to supplement the $17.4bn in government loans that are keeping them in business.
The sales slump hit Ford at both ends of its model lineup. Sales of its F-Series truck, traditionally the best-selling vehicle in the US, fell 55%, while sales of the Focus small car dropped 39%.
- AP