Auto sales fall despite increase in incentives

  • Follow Business

DETROIT --- Major automakers' U.S. sales continued their deep slump in February, putting the industry on track for its worst sales month in more than 27 years as huge rebates and low-interest financing failed to spur fearful consumers to make a major purchase.

The Fremont Pontiac GMC lot sits empty in Newark, Calif. Analysts say February sales will fall from January's dismal total, making it the worst month in 27 years.  Associated Press
Associated Press
The Fremont Pontiac GMC lot sits empty in Newark, Calif. Analysts say February sales will fall from January's dismal total, making it the worst month in 27 years.

General Motors' sales tumbled 53 percent from a year earlier, while Ford's U.S. sales fell 48 percent and Chrysler's fell 44 percent. The major Japanese automakers fared only slightly better.

The slide casts further doubt on the financial viability of GM and Chrysler, which need to sell cars and generate critical cash to supplement the $17.4 billion in government loans that are keeping them in business.

Automakers and analysts have been predicting sales will rebound in the second half of this year, but they are becoming less certain. Massive layoffs, the stock market decline and sliding home values are prompting people to hold on to their cars longer, while those who are buying are more often opting for a used car or truck.

Emily Kolinski Morris, Ford Motor Co.'s top economist, said retail sales to individuals had been stable for four months but dropped in February, indicating that last month might not be the bottom for auto sales.

The bottom, she told reporters and industry analysts, can't be predicted. But she said Ford's forecast calls for a modest second-half recovery as economic stimulus measures take hold.

Industry analysts say when all the numbers are tallied, February sales could be worse than January's total of 656,976 light vehicles.

The trough is likely even though automakers spent more on rebates, low-interest financing and other incentives.

"If it wasn't for the generous level of incentives now, we probably would be seeing even lower sales, if you can believe it," said Jesse Toprak, the executive director of industry analysis for the auto Web site Edmunds.com.

Ford said it plans to produce 425,000 vehicles in the second quarter, down 38 percent from the 685,000 it made in last year's April-June period.

GM said it expects to make 550,000 vehicles in the second quarter, a decline of about 34 percent from year-ago levels.

The average incentive per vehicle last month rose 8 percent from January to $2,914 per vehicle sold, Edmunds said. Incentives climbed to an average of 20 percent of the sticker price of a new car.


Top headlines

Many black colleges struggling

Although Paine has struggled with its own failures over the past several years, HBCUs across the nation are dealing with some of the same troubles that are threatening their missions and existence.
Search Augusta jobs