Automakers feel the burn of tanking economy

By STEVEN COLE SMITH

Need more proof that the economy is tanking? Record high gas prices and a new low in consumer confidence conspired to torpedo auto sales last month, with a disastrous drop in truck and sport utility vehicle sales accounting for most of the bad news.

Chrysler, Ford and Mercury, General Motors and Toyota Motor Corp. were the big losers, with double-digit declines in June compared with a year ago, sales figures released Tuesday revealed.

Even the Prius couldn’t save Toyota — sales of the fuel-sipping hybrid were down 25 percent from a year ago, but only because the company can’t get enough parts to meet the demand. There is at least an eight-week wait for the Prius in many markets for folks looking to downsize their gas costs.

George Pipas, Ford’s U.S. sales-analysis manager, said the auto industry has not experienced such a crisis since 1980 and 1981, caused then by inflation, high interest rates and a spike in gas prices.

Bottomless pit

But Pipas said the current situation “is more onerous. And there’s no indication we’ve reached the bottom.”

Not surprisingly, the gloomy numbers were led by sales of larger SUVs. Ford Expedition sales dropped 60 percent, Jeep Commander 57 percent, Toyota 4Runner 49 percent, Dodge Durango 48 percent and Lincoln Navigator 41 percent.

Sales of the Ford F-Series pickup line, traditionally the best-selling vehicle in the country, dropped from 65,136 in June 2007, to 38,789 last month — a decrease of 40.5 percent.

Most luxury- and sports-car brands suffered, too. Porsche, for instance, saw sales drop 19 percent from June 2007, but sales of the Porsche Boxster rose 8 percent. Despite a base price of more than $46,000, it’s Porsche’s least expensive model, and with an EPA fuel mileage rating of 20 mpg city, 29 mpg highway, it’s the least thirsty Porsche sold.

Early indications show Central Florida sales are reflecting the grim national trends.

“It’s a very tough market,” said Ian Riding, a sales manager at Sun State Ford in Orlando, who also hosts a car-buying radio show on weekends. “It’s the toughest I’ve seen. Downsizing is the trend—people with two cars are going down to one. People with big cars want smaller ones.”

Equity issues

Also, Riding said, “I’ve never seen negative equity like we’re seeing now,” meaning many customers looking to trade in a gas guzzler owe so much more on it than it’s worth that they are either forced to keep it or take a major loss in trading it for something more economical.

“I’d like to say things are about to get better,” Riding said. “But we don’t know what will happen any more than you do.”

McClatchy-Tribune Information Services