Auto sales down in February

I've been a little busy the past week with other things, so blogging has been a little light. I have found an interesting New York Times story showing that auto sales are still in the dumpster. I'm not surprised. With the credit market being frozen, Americans are still worried about the fate of their jobs, they are not going out to purchase new cars. So the automakers are suffering. From The New York Times:

DETROIT — New vehicle sales in the United States still have not hit the bottom of the freefall that began in late 2007, and results being released Tuesday showed a considerable decline in February after the market appeared to be stabilizing, despite some of the biggest discounts ever offered.

The three largest automakers, including Toyota, each said their sales declined at least 40 percent from February 2008.

Sales were down 53 percent at General Motors, 48 percent at the Ford Motor Company and 40 percent at Toyota.

Honda reported a 38 percent drop, while Nissan said its sales fell 37 percent.

“The February numbers are clearly a step down from where we’d been running the last four months,” said Michael C. DiGiovanni, G.M.’s chief sales analyst. “It’s unsettling to our business. These are obviously unsustainable levels which are causing almost every auto manufacturer across the world to look for government aid.”

G.M., of course, has gotten $13.4 billion from the federal government to help it avoid seeking bankruptcy protection, while Chrysler, which will report its sales later Tuesday, has received $4 billion.

Over all, sales were down about 42 percent on a year-over-year basis, G.M. and Ford estimated. In recent months, sales have been at the lowest level since the early 1980s.

G.M. and Ford both said they expected their second-quarter production to be at least a third lower than the same period in 2008.

Ford’s senior United States economist, Emily Kolinski Morris, said February’s decline was disappointing given that sales had been relatively flat on a month-to-month basis since October.

Auto sales will continue to stay flat, until we get a combination of some type of job growth, a thawing of the credit market, and a reformation of this housing mess we're currently in. The NY Times story reports that consumers are trying to save money by purchasing used cars, rather than buying new. "In February, 27 percent of people who visited a dealership intending to buy a new car instead bought a used one, up from 16 percent in recent months, according to Edmunds.com." These consumers have been hurt by the recession, with sinking home values and 401K retirement accounts. They are not going to purchase a new car that will lose 20-30 percent of its value the moment they drive off the lot. And the dealerships know that. According to the NY Times story, "Discounts on Chrysler and Dodge brand models amounted to about 20 percent of their sticker prices, the highest ever recorded." The dealers are begging for consumers to buy their cars. And yet, with the recessionary problems, the tight credit market, and consumer worries on housing, retirement and jobs, the incentives are not working.