General Motors Corp. said earlier this month it is planning for the entire industry to sell 10.5 million new vehicles in the U.S. this year, while Chrysler LLC has said it's planning on 11.1 million units. But few people are expecting the automakers to start 2009 at that pace.
Fleet sales - big-volume sales to customers like rental car companies and municipalities
- typically account for about 20 percent of industrywide sales, but analysts expect that to be down sharply in January. Rental car companies have taken a big hit as consumers and businesses slash their travel budgets in the economic downturn, and the companies are holding onto their old cars rather than buying new ones.
"Our demand is down double-digits," said Richard Broome, spokesman for rental car company Hertz Global Holdings Inc. "So the need for new cars is less now than it would be in most years."
Compounding that downturn have been the production cuts and factory idlings across the auto industry. Many fleet customers get their deliveries right after cars roll off the assembly line, so when factories suspend production, those deliveries come to a halt.
Many U.S. auto plants have been closed all month, with some shut down as long as eight weeks, said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com. He predicted industrywide fleet business fell 50 percent from January 2007.
At the same time, the ills that have plagued the industry for the better part of 2008
- a battered economy, anxious consumers in no mood to make big purchases, and banks in no mood to lend to them
- haven't gone anywhere.
Last week, the Treasury Department said it would give Chrysler's financing arm a $1.5 billion loan to help spur lending. The Treasury also gave GM's financing unit, GMAC LLC, $6 billion in assistance last month.
The companies immediately announced low-interest financing offers and less prohibitive credit requirements, but it remains unclear if the offers have been effective.
Mike Jackson, chief executive of the largest auto dealership chain, AutoNation Inc., said Thursday that those billions have failed to significantly loosen credit for his company's customers.
Chrysler Vice Chairman Jim Press, however, predicted a better month than December due in large part to the company's employee pricing offer, incentives and more available credit thanks to the loan.
Press said last weekend that Chrysler's market share surpassed 10 percent through Jan. 22, the highest share for the company in the past couple of months.
