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 Sales dropped by double digits in March, even for usual stalwarts like Toyota. And with fragile consumer confidence, falling home values, tightening credit and high energy prices, it may be some time before auto sales recover.
General Motors and Chrysler both reported a 19 percent drop in U.S. sales on Tuesday. Ford's sales fell 14 percent and Toyota was down 10 percent compared with last March. Nissan fell 4 percent and Honda reported a 3 percent drop.
GM remained upbeat, saying demand is building up and the federal economic stimulus package could help boost sales in the second half of the year.
"We hope we are in the trough and we are now gradually coming back," Mike DiGiovanni, GM's executive director of global markets and industry analysis, said in a conference call.
The introduction of high-volume products this fall, including the new Ford F-Series and Dodge Ram pickups, also should boost sales. But most automakers seemed resigned to more tough times ahead.
"I'd like to be able to tell you that the worst is behind us, but I really can't give you that assurance," said Jim Farley, Ford Motor Co.'s sales and marketing chief. Farley said Ford is concerned the shrinking availability of consumer credit will hurt sales and that the second quarter could be more difficult than the first.
Bob Carter, general manager of Toyota Motor Corp.'s U.S. Toyota division, said the company is lowering its full-year sales forecast.
"The recovery in the second half of this year may not be as robust as we had originally hoped for," Carter said.
Jesse Toprak, chief industry analyst for the auto information site Edmunds.com, predicted a relative improvement in the second half of the year but not enough to make up for the losses in the first half. Increasing incentives could also boost sales, he said. Incentive spending hit $2,500 per vehicle for the industry in March, and Toprak said it could reach record levels in June and July.
Toprak said consumers' lack of confidence is the top reason for this
year's lackluster sales
"It's not because people can't afford to but a car. It is because they don't know what's going to happen and they've lost trust in the stability of the economy," he said.
Small cars fared best in March as consumers focused on fuel efficiency. Sales of the Ford Focus jumped 24 percent for the month, while Toyota's subcompact Yaris saw sales rise 83 percent and Honda's subcompact Fit surged 74 percent.
Ford and GM said consumers are choosing more fuel-efficient four-cylinder engines over six-cylinder options. Ford's top U.S. sales analyst George Pipas said 70 percent of Ford Fusion buyers are now getting the four-cylinder engine for the midsize car, compared to 60 percent at this time last year.
GM's truck and SUV sales were down 22 percent in March while its car sales fell 14 percent. New vehicles like the Chevrolet Malibu were a bright spot, with sales up 17 percent, but sales of Chevrolet pickups were down 25 percent while sales of GM's gas-guzzling Hummer brand fell 29 percent. GM's sales dropped 11 percent for the first quarter.
Mark LaNeve, GM's vice president for North American sales and marketing, said a monthlong strike by American Axle and Manufacturing Holdings Inc. that has idled 30 factories that make GM trucks, cars and SUVs has cut the company's production by 100,000 vehicles. But he said slow sales and a high inventory before the strike has minimized the impact. LaNeve said truck and SUV supplies were "more than adequate" for spring, but he wouldn't speculate on whether the strike will hurt hotter sellers like the Malibu.
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 "We don't believe that it's affected retail business one bit to date," LaNeve said.
A 24 percent jump in sales for Ford's popular Edge crossover couldn't make up for falling sales of pickups and large SUVs. Ford's truck and SUV sales dropped 16 percent versus March 2007. Sales of both the Ford Expedition and Lincoln Navigator SUVs fell 34 percent.
Ford's car sales fell 10 percent, dragged by declining demand for the Ford Mustang and Crown Victoria sedan. Ford's overall sales for the first quarter were down 9 percent.
Toyota, which beat Ford to become the No. 2 automaker by U.S. sales last year, held onto its lead in the first quarter, outselling Ford by more than 43,000 vehicles. But Toyota took a beating in March, reporting truck and SUV sales down 14 percent and car sales off 7 percent. The Tundra pickup saw a surprising 17 percent sales increase, but totals were hurt by SUV sales, which fell 20 percent. Toyota's sales dropped 6 percent for the quarter.
Chrysler's car sales fell 13 percent and its truck sales plunged 22 percent, in part because it cut low-profit sales to rental car agencies. Chrysler's sales fell 16 percent for the quarter.
Steven Landry, executive vice president of Chrysler's North American sales, said the company hopes to boost sales with a 6.9-percent financing offer to subprime borrowers, down from the double-digit rates offered last year.
Honda Motor Co., which had bucked the downward trend in February, saw its 3 percent increase in car sales eroded by a 12 percent decline in truck and SUV sales. That drop was led by the Honda Pilot SUV, which fell 24 percent. Honda's sales were flat for the first quarter.
Nissan Motor Co. reported a 10 percent increase in car sales, led by the subcompact Versa and the newly redesigned Altima. But Nissan's truck and SUV sales plummeted 20 percent, with the Nissan Titan pickup down 45 percent for the month. Nissan's overall sales were down 4 percent for the quarter.
Despite the bad news, auto shares rallied along with the market amid optimism that the worst of the credit crisis may have passed and the economy is faring better than expected. GM shares rose $1.10, or nearly 6 percent, to close at $20.15. Ford gained 25 cents to $5.97, Toyota's U.S. shares added $2.39 to $103.28 and Honda's U.S. shares were up $1.07 to $29.88.
The Associated Press reports unadjusted 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 26 sales days last month and 28 in March 2007.
[Associated Press; By DEE-ANN DURBIN]
Copyright 2008 The Associated Press. All rights reserved. This
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