October 2, 2008 in Business

Credit, fuel prices stall auto sales

All automakers feeling the pinch
Associated Press
 
David Zalubowski photo

A line of 2008 4Runners at a Toyota dealership in Lakewood, Colo., are testimony to sluggish auto sales.
(Full-size photo)(All photos)

DETROIT – 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.

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