The good news for the auto industry in December came when General Motors and Chrysler got their federal bailout. The bad news is coming Monday, when automakers are expected to report another month of staggering sales declines.
Many analysts are predicting the industry to report that U.S. sales in December dropped about 40 percent, bringing an official close to what has been one of the industry's most trying years and providing little hope for much improvement in 2009.
The auto Web site Edmunds.com is predicting December sales of 852,000 light vehicles in the U.S., down 38 percent. Deutsche Bank auto analyst Rod Lache predicted a sales drop of 41 percent.
"All the negative factors that were with us the last three months will still have an impact on sales in December," said Jesse Toprak, executive director of industry analysis for Edmunds.
Meanwhile, GM's troubled financial arm, GMAC Financial Services LLC, has received a $5 billion cash injection from the Treasury Department. GM said the money allowed it to launch a low-interest financing program for dozens of its vehicles. "It alleviates one of the main consumer concerns, which is accessing credit," Mark LaNeve, a GM vice president, said of the deal on a conference call earlier this week.
Chuck Hanes, the general manager for Team Chevrolet in Smyrna, said GMAC's recent moves have been a big benefit to dealers, which have been struggling for months with empty showrooms and tight lending requirements.
GMAC recently loosened access to car loans. Plus, GM will begin offering zero-interest loans to non-GMAC lenders.
"We have been anxiously awaiting this," Hanes said. GMAC also recently dropped its minimum credit score down to 620, "which opens it to a broader selection of buyers," he said.
Sales slump is likely to lingerAs the battered auto industry staggers into 2009, analysts caution that the sales slump probably will persist.
"Perhaps by the second half of next year there can be a case for an improved economy, or at least an economy that's getting back on its feet," said George Pipas, Ford Motor Co.'s top sales analyst.
A major source of trouble in 2008, particularly for the Detroit Three, was consumers' newfound aversion toward pickups and sport utility vehicles. These high profit-margin vehicles have been the bread and butter for GM, Ford and Chrysler, and Asian automakers like Toyota Motor Corp. and Nissan Motor Co. boosted their own truck and SUV production in recent years.
But if December is anything like the rest of the year, 2008 will be the first year that passenger cars outsold trucks and SUVs since 2000, Pipas said.
"There was a presumption on the part of the auto manufacturers — and it wasn't just a Big Three thing — that trucks would never look back once they outsold cars in 2001," Pipas said. But the summer's run-up in gas prices and a political and consumer climate that has shifted drastically against big gas-guzzlers changed all that this year, he said.
"There's no rebound in the SUV market," he said. "The idea that people are going back to sport utility vehicles is just that — it's an idea."
Gas prices at the pump have fallen dramatically in recent weeks, though. On Friday, the average price of a gallon of unleaded in Nashville was $1.49, according to AAA's latest survey of gas stations. That's down from $2.945 per gallon a year ago here.
Real Estate Outlook: Sales Jump in Ailing Markets
GM adds a month to Spring Hill downtime
Bailout is relief for automakers, but not for all
