US car makers started 2009 in reverse

Devastated by an economy in which few people have the spare cash to buy a car or can obtain the financing to do it, Chrysler's domestic sales for January were less than half what they were a year earlier. 

Sales fell 49% at General Motors and 40 percent at Ford. Toyota and Nissan's sales each fell at least 30%. 

With January's drop, the industry's sales have declined for 15 straight months when compared with the same month in the previous year. There hasn't been a year-over-year increase since October 2007, when light vehicle sales rose a paltry 1%, according to Autodata Corp. and Ward's AutoInfoBank. 

The industry's sales of 656,976 vehicles, compared with just over a million in January 2008, translates to a seasonally adjusted annual sales rate of 9.57 million, according to Autodata. That's the worst performance since June 1982, when the nation was mired in a recession. 

Huge declines in low-profit fleet sales to rental car companies made January an exceptionally bad month, even though automakers said they were encouraged that retail sales appeared to be stabilizing after four straight months with an industrywide sales plunge of at least 30 percent. 

US automakers will need sales to improve if they want their turnaround plans to be successful. After receiving US$13.4 billion in federal loans to stay afloat, General Motors Corp. and Chrysler LLC have said they are basing their plans on industrywide sales this year of 10.5 million and 11.1 million vehicles, respectively. 

The hefty incentives automakers have rolled out have done little to boost sales. Chrysler has been offering employee pricing, zero-percent financing and up to US$6,000 in rebates on its vehicles, and GM said it will launch another zero-percent financing with the help of the $5 billion in federal aid its financing arm, GMAC, received late last year. 

The biggest dent last month was in fleet sales — big volume sales to rental car companies and municipalities — which fell sharply in January as production slowed or was shut down at many US auto plants for most of the month. 

GM said its fleet sales fell 80% to just over 13,000 vehicles in January, marking their lowest sales level since 1975. 

Chrysler said its January fleet sales fell 81%from year-ago levels. Ford said fleet sales fell 65 percent, but the decline in the automaker's retail sales had stabilized. 

One of the few large automakers to post a sales increase was South Korea's Hyundai Motor Co., which posted a 14% gain. Hyundai credited its offer that covers a new vehicle's depreciation for customers who want to return a car because they lost their job. Subaru posted an 8% sales increase from a year earlier, its second-straight month of sales gains. 

Toyota Motor Corp.'s sales dived 32 percent for the month, as sales of its Prius hybrid slid 29%. Nissan Motor Co.'s sales dropped 30%. 

Honda Motor Co.'s sales fell 28%, but the Japanese automaker saw a 6% increase in sales of its Fit subcompact, and sales of the updated Acura TSX sports sedan rose 16 percent.