Sales of vehicles in the US plummeted in October to levels not seen in 25 years. Sales were down 31.9% during the month compared with the same period last year. GM was down a whopping 45%–the worst month for the company since 1945 (GM officials said the October sales rate was, in its estimation, the worst of the post-World War II era, given the nation’s population growth since the 1940s).
Sales at Ford fell 30.2%, and at Chrysler by 34.9%. Japanese automakers also took a big hit. Toyota’s sales dropped 23% in October, while Honda’s sales plunged 25.2%, and Nissan’s sales fell by 33%.
Shaky consumer confidence and the inability of shoppers to get loans because of tight credit drove sales were the most to blame.
Said a NY Times report: “The sharp decline will only further burden the Detroit companies, and may increase pressure in Washington to provide emergency financial aid to General Motors, the Ford Motor Company and Chrysler. GM has been burning through an estimated $1 billion in cash each month since the middle of the year, although some analysts believe that figure has grown substantially with the drastic drop in demand for new vehicles.”
“If they can’t get any help, whether it’s through the government guaranteeing loans or getting a total bailout, we could definitely see one of them going bankrupt,” Rebecca Lindland, an analyst with IHA Global Insight, told the paper.
GM, which is pursuing a merger with Chrysler, was recently turned down by the Treasury Department for $10 billion in federal assistance. All three Detroit automakers are hoping for the release of $25 billion in low-interest loans from the Energy Department for the development of more fuel-efficient vehicles.
RBR/TVBR observation: Take a listen to the radio—you won’t hear local dealer car ads much anymore; you won’t hear much national auto, either. It’s DR ads wall to wall, sprinkled in a bit with pharmaceutical. One of our neighbors who’s in the auto financing business—doing direct B2B with the dealers—has so far survived three rounds of layoffs. Since there is next to no business being conducted, she hasn’t been to work in a week, but is still employed. There is little to no business out there to write. She’s just waiting for bad news to come at this point. So without financing approval and backing from the banks, it all grinds to a halt—from the auto ads to the dealer floors.
