U.S. auto sales plunge in December

DETROIT Chrysler said Monday its December sales dropped 53 percent because of the recession and fewer fleet sales, while Toyota Motor Corp. reported a 37 percent slide and Honda Motor Co. said its sales tumbled 35 percent.

Ford Motor Co.'s U.S. sales fell 32 percent in December. General Motors Corp. and Nissan Motor Co. both posted 31 percent declines.

Ford's sales for 2008 fell 21 percent from a year earlier, keeping the Dearborn automaker in third place in the U.S. auto sales race, falling behind Toyota for the second straight year.

Toyota's 2008 sales fell 16 percent to 2.22 million, compared with Ford's 1.98 million. Detroit-based GM's 2008 sales totaled 2.95 million, down 23 percent from the year before. Honda's 2008 sales fell 8 percent.

Other automakers report their sales later Monday.

The auto Web site Edmunds.com predicted sales for the full year will total just over 13 million, down 18 percent from 2007 and the lowest level since 1992.

Subaru of America Inc. said its U.S. sales crept higher in 2008, making the Japanese company likely to be the only major automaker with a yearly sales increase. Subaru's U.S. sales rose by 0.3 percent to 187,699 vehicles from 187,208 in 2007, as consumers snapped up its top-selling Forester and Impreza models.

Chrysler's December sales totaled 89,813 vehicles, compared with 191,423 in the year-ago month. Despite the plunge, the recent month's sales represented a 5 percent increase over November levels. the Auburn Hills, Mich., carmaker said the December drop included a 63 percent decrease in fleet sales.

Ford said it sold 138,458 light vehicles in December, down from 204,787 in the same month in 2007. The automaker doesn't see much hope for improvement in early 2009, but predicted a small uptick later in the year.

"We expect the first few months of 2009 to feel much like last three months of 2008," Emily Kolinski Morris, Ford's senior economist, said during a conference call with reporters and industry analysts.

GM sold 220,030 light vehicles in December compared with 319,837 a year earlier. The recent month's results were boosted by heavy sales incentives, including financing offers announced near the end of the month after the Treasury Department said it would give $5 billion in federal aid to GM's ailing financing arm, GMAC LLC.

The sales slump continues to mean good deals for consumers. Aaron Bragman, automotive marketing research analyst for IHS Global Insight in Troy, Mich., said large incentives such as zero-percent financing and rebates will continue well into 2009 as automakers try everything they can to boost sales.

Full-size truck incentives ran from $7,000 to $8,000 in December, and Bragman expects that to continue all year as the economy fails to improve.

"You look in the paper and the deals on brand new GM pickups are astonishing," he said. "The discount that you get buys a heck of a lot of gasoline."

One automaker, Hyundai Motor America, is trying to woo skittish buyers by promising to let them return cars free for up to a year if they lose their jobs and can't make the payments.

The "Hyundai Assurance Program" applies to customers stricken by misfortune outside of their control, such as losing their job, becoming disabled or losing their drivers license for medical reasons. It covers depreciation up to $7,500.

John Krafcic, president of Hyundai Motor America, said traditional incentive spending in the fourth quarter was about half as effective industrywide compared with the same quarter in 2007.

"We needed to think about turning some other knobs to turn sales," he said. "This is all about fear."

Similar bold moves might be necessary throughout the year. Global Insight predicts that U.S. sales will drop from 13 million in 2008 to 10.3 million this year as the economy continues to sputter.

While that may bring deals for consumers, it's bad news for the automakers. GM and Chrysler were forced to go to the government for loans to hold off bankruptcy, and Ford says it may need government money if sales don't recover in 2009.

But Bragman said the sales drops are not unique to the U.S.-based automakers and encompass the entire domestic market.

Toyota said it sold 141,949 vehicles in December, down from 224,399 a year earlier. Sales of the Prius hybrid dropped 45 percent as gas prices fell from their record highs in July.

Honda sold 86,085 vehicles last month, down from 131,792 a year earlier but up from 76,233 in November. Nissan. The month-over-month improvement was a trend seen by most automakers.

Nissan sold 62,102 vehicles - including Infiniti models - in the U.S. compared with 89,555 in December 2007. For 2008, Nissan U.S. sales dropped 11 percent.

Ford said it sold 43,087 Ford, Lincoln and Mercury cars last month, down 26 percent from December 2007. The company sold 90,418 Ford, Lincoln and Mercury light trucks in December, 34 percent fewer than the same month a year earlier.

Ford said there was a glimmer of hope in its sales figures. Its market share was 14.6 percent, up 0.7 percentage point from December 2007 and the first time since 1997 that the company has seen its share go up three straight months.

It also sold 195,823 Focus compacts in 2008, the highest total since 2004 and a 13 percent increase from 2007.

"This is a strong ending to end a very challenging year," Jim Farley, Ford's group vice president for marketing, said in a statement.

Farley said incentives for consumers later this year largely will depend on each manufacturers' inventories, but he sees strong incentive spending and good deals for consumers at least through the first quarter.

GM, which said its market share held steady at 22 percent for the year, said its December car sales totaled 87,506, down 25 percent from the year-ago period. But the total included a 43 percent jump in Malibu sales and a 19 percent increase in Impala sales.

December light truck sales fell 25 percent to 132,524 units and included a 66 percent plunge in demand for the TrailBlazer SUV and a 34 percent drop in Sierra sales.

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