New-auto sales hit 25-year low

DETROIT — Sales of new cars and trucks in the United States plummeted in October to levels not seen in the auto industry in 25 years.

The stunning drop affected all automakers, as shaky consumer confidence and the inability of many eager shoppers to get loans because of tight credit drove sales down 31.9 percent during the month compared with the same period last year.

The grim results — particularly for General Motors, whose sales dropped 45 percent during the month — raised new concerns about the chances of survival for Detroit's troubled Big Three.

The sharp decline will only further burden the Detroit companies and may increase pressure in Washington to provide emergency aid to General Motors, Ford 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.

"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," said Rebecca Lindland, an analyst with IHA Global Insight.

GM, which is pursuing a merger with Chrysler, was just 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.

Sales of new vehicles had been declining throughout the year because of unstable gas prices, a weak economy and a tightening of credit by banks and other lenders.

Automakers reported total sales of 838,000 vehicles during October, the lowest total since January of 1992.

However, the annualized selling rate in that month — a projection of full-year sales at the current rate — was a miserable 10.5 million vehicles, the worst since February of 1983, according to Ward's Autodata.

Sales at Ford fell 30.2 percent, and at Chrysler by 34.9 percent.

GM's 45 percent drop meant the U.S. market share of the largest American automaker sank to just 20.1 percent.

The Japanese rivals of Detroit's Big Three hardly fared better, despite having a greater selection of small, fuel-efficient passenger cars in their product lineups.

Toyota's sales dropped 23 percent in October, while Honda's sales plunged 25.2 percent, and Nissan's sales fell by 33 percent.

"One thing that's clear this month is that absolutely no one is immune," said Lindland. "This is a situation that is really dire."

GM's top market analyst, Michael DiGiovanni, said the lack of financing for automotive lenders is driving sales down to a "severe recessionary" level.

"At this juncture in U.S. automotive history, it's highly critical for the government and the banks to help us," he said.

Officials at other automakers said the downturn will probably continue into next year.

"We would not expect that we are at the bottom yet," said Emily Kolinski Morris, Ford's senior economist.

Even automakers that have been offering big discounts stumbled badly in October. Toyota, for example, has been providing zero percent financing on the bulk of its lineup for a month, yet still saw its sales tumble 23 percent.

"Buyers are in the driver's seat in a market that's awash with good deals, strong values and new products," said Bob Carter, general manager of the company's Toyota division.

Besides a new round of incentives for consumers, the October results will probably prompt automakers to make more production cuts and lay off additional factory workers.

But unlike previous production cuts, the reductions might not be limited to gas-guzzling SUV's or slow-selling pickup trucks.

There are no vehicles, according to one Ford executive, that have proved immune from the slumping demand.

"There are no hot segments," said George Pipas, Ford's market analyst. "And there really are no hot products."