GM Oct. sales fall nearly half; Ford drops 30 pct.

[Mrs. Sharon B. Hodge]

GM Oct. sales fall nearly half; Ford drops 30 pct.
By TOM KRISHER and BREE FOWLER

DETROIT – General Motors' October U.S. sales plunged 45 percent and Ford's dropped 30 percent, as low consumer confidence and tight credit combined to scare customers away from showrooms.


The results released Monday — along with drops of at least 23 percent for Toyota, Honda and Nissan — appeared to fulfill prophecies that the industry's sales as a whole will hit their worst level in decades.

Mike DiGiovanni, General Motors Corp.'s executive director of global market and industry analysis, said the automaker expects last month was the industry's worst U.S. sales performance since 1975 with only 851,000 vehicles sold, for an annual rate of 10.7 million vehicles.

"This is clearly a severe, severe recession for the U.S. automotive industry and something we really can't sustain," DiGiovanni said. "There really needs to be actions focused on the consumer and available credit."

Other automakers are scheduled to report their sales later Monday.
Detroit-based GM said its light trucks sales tumbled 51 percent compared with the same month last year, while demand for passenger cars fell 34 percent.

The results were less severe at Ford Motor Co., which said its Ford, Lincoln and
Mercury car sales were off 27 percent, while light truck sales for the three brands were down more than 30 percent.

Overall, GM sold 168,719 vehicles, while Ford, including its Volvo brand, sold 132,278 light vehicles last month.

If GM's sales were adjusted for population growth, October would be the worst month of the post-World War II era, DiGiovanni said.

"Clearly we're in a very dire situation," he said.


Despite the steep drop, GM's total was enough to keep it ahead of Toyota Motor Corp. for the No. 1 U.S. sales spot. Toyota, which rolled out an offer of zero-percent financing during the month, sold 152,101 vehicles, down 23 percent from a year earlier. The drop included a 34 percent decline in light truck demand, while car sales fell 15 percent.

Honda Motor Co.'s sales fell 25 percent to 85,864 vehicles, as truck sales fell 29 percent. But sales of cars from its Acura luxury division rose 6 percent.
Nissan North America Inc. sold 56,945 vehicles, a 33 percent drop, including a 52 percent decline in truck sales.

Ford officials said on a conference call with reporters and industry analysts that as bad as October sales were, it's probably not the bottom.

Emily Kolinski Morris, the Dearborn-based company's senior economist, said that because automobiles are more durable, people can wait without buying a new vehicle until they feel more confident in the economy.

"The answer to when we will start to come out of that trough lies in when the economy comes out of that trough," Kolinski Morris said.


Ford likely will announce car and crossover vehicle production cuts when it announces its third-quarter earnings on Friday, said George Pipas, Ford's top sales analyst. Truck production cuts earlier in the year have kept inventories low, but car and crossover inventories need to be brought into line, he said.

Sales of the company's F-Series pickup trucks, traditionally its top seller, fell 16 percent in October. The company began selling a new version of the pickup last month and has announced plans to add 1,000 workers at its Dearborn Truck Plant in January to handle what it expects will be increased demand.

Even Ford's Focus small car, which had experienced sales increases during the summer, saw its sales drop 18 percent.

Pipas said that even cars that once were selling well aren't selling in a U.S. market that last month shrank to a seasonally adjusted annual sales rate of 11 million vehicles. The closely watched figure indicates what sales would be if they remained at their current rate all year, with adjustments for seasonal fluctuations.

"In an 11 million industry, you're not going to see very many products for very many manufacturers post year-on-year sales increases."

Some industry analysts are predicting an annual sales rate in October of 10.8 million or less, down from 16.1 million a year ago. If the rate drops below 10.83 million, it would be the worst sales month since March 1983, according to Ward's AutoInfoBank.

Jim Farley, Ford's group vice president of marketing, said it's likely auto companies will start their year-end sales promotions early to try to drum up business, although he would not say what steps Ford would take.

GM said it will start its annual "Red Tag" sale Tuesday, with lower pricing and customer cash back on most of its new models. The sale typically begins later in November.

After reeling from a 32 percent drop in September sales, Toyota launched zero-percent financing on almost all of its models prompting analysts to predict that it could post better-than-average October sales and potentially surpass GM for the first time as the U.S. sales leader.

But, like at Ford, the vast majority of Toyota models still posted double-digit declines. Notable exceptions included sales of the Corolla, which rose 6.1 percent, and the Sequoia sport utility vehicle, which posted a 21 percent gain.

Meanwhile, GM's financing arm, GMAC Financial Services, said it was tightening its lending standards to require a credit score of at least 700, potentially shutting out some buyers.

Mark LaNeve, GM's vice president for North American sales, said steep cutbacks in leasing accounted for half of GM's year-over-year sales decline.

About 25 percent of GM's volume in October 2007 was from leasing, but the automaker did almost no leasing last month through GMAC, LaNeve said.

Analysts said GM's employee pricing incentives in September likely pulled in buyers who would have waited to purchase cars, further reducing October sales.

The Associated Press reports unadjusted auto sales figures, calculating the percentage change in the total number of vehicles sold in one month compared with the same month a year earlier. Some automakers report percentages adjusted for sales days. There were 23 sales days last month, two less than in October 2007.
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AP Auto Writer Bree Fowler reported from New York.