Tight credit, financial chaos slam sales

Uncertain finances have consumers delaying car purchases.

DETROIT (AP) — Tight credit, economic worries and high gasoline prices combined to crush the sales of U.S. and foreign automakers alike last month, with Ford, Toyota, Chrysler and Nissan all posting drops of more than 30 percent.

Ford Motor Co.’s 34 percent decline marked its worst sales month this year, and the results across the industry are a strong indication that the financial turmoil that has swelled since mid-September is pushing the auto industry deeper into its trough.

General Motors Corp., buoyed by its offer of employee pricing on most of its vehicles, saw U.S. sales drop a less severe 16 percent, boosting the automaker’s market share to its best level all year.

Dealers from many manufacturers said their customers are having an increasingly hard time qualifying for loans to buy autos, as banks have restricted lending because of widespread mortgage defaults that led to disruptions in the financial markets and the collapse of several banks. Plus, several automakers’ finance arms have limited or discontinued leasing.

Jim Farley, Ford’s group vice president for marketing, said economic conditions have raised uncertainty among buyers.

“Even if you have good credit, there’s a reluctance to pull the trigger on a big-ticket item,” he said.

Nissan Motor Co., which posted significant sales increases in July and August, saw its sales plunge 37 percent on double-digit drops in demand for nearly every one of its models.

Chrysler LLC said its sales tumbled 33 percent, and Toyota Motor Corp.’s sales fell 32 percent. Honda Motor Co., one of the few automakers that had posted sales growth through August, reported a 24 percent drop.

George Pipas, Ford’s top sales analyst, said nearly all automakers saw “extremely weak” sales in the waning days of the month as the Wall Street crisis grew and Congress debated the government’s $700 billion bailout of the financial industry.

“It was tantamount, really, to a natural disaster,” he said.

GM’s market share grew to more than 28 percent in September because it experienced smaller sales drops than its competitors, said Mark LaNeve, the automaker’s vice president of North American sales.

The share did not come with the expense of incentives, which he said averaged only $100 per vehicle more than in August and were flat from July to August despite the monthlong employee pricing offer, LaNeve said.

Incentive spending was reduced, he said, because GM did almost no leasing during the month.

But even though it may have gained market share, LaNeve said the numbers were still down year-over-year.

“A few years ago I’d have jumped out the window with these numbers, and we’re on the 39th floor here,” he said in a conference call from GM’s downtown Detroit headquarters.

If overall U.S. industry sales drop in September, it will be the 11th straight monthly decline when compared with the year-ago period. That would be the longest string of down months since 14 straight negative months ended in December 1991, according to Autodata Corp.