U.S. auto sales for January are expected to drop to a 27-year low, extending a 15-month downturn and adding weight to the view that the hard-hit sector will remain a drag on the economy in the current quarter.
Major automakers are scheduled to announce January sales results on Tuesday. The releases by General Motors Corp, Toyota Motor Corp, Ford Motor Co and others will represent the first indicators of the shell-shocked state of U.S. consumer confidence for 2009.
Auto executives and major dealers already have warned that sales for January showed no sign of improvement from the bleak trend that took hold in the fourth quarter of 2008.
U.S. auto sales, which typically account for about 20 percent of all retail sales, dropped by 18 percent in 2008 to a 16-year low of 13.2 million units.
The median forecast of 36 economists surveyed for Reuters is for an annualized sales rate of 10.2 million cars and light trucks for the month. [nL2697492]
That would mark a retreat from the 10.3-million unit sales rate the market hit in December despite steep discounting by the automakers and steps intended to ease credit.
Analysts and auto executives said sales of new cars and trucks to U.S. car rental agencies took a major hit in January, reflecting the growing pressure on those companies to cut costs by keeping vehicles in their fleets longer.
"Retail (showroom) sales appear to be marginally improving, or at least stabilizing," Barclay's Capital analyst Brian Johnson said in a note for clients on Friday. "But fleet sales are showing some very sharp declines, both due to the fragile financial state that rental companies are in, and the fact that assembly plants have been idled during much of the past five to six weeks."
Johnson forecast January U.S. auto sales near 10.2 million units, saying that declines expected for Toyota and Honda Motor Co of between 25 percent and 32 percent from prior-year sales results showed the pressure on the market.
Unlike GM and Chrysler LLC, which are struggling to restructure under federal oversight and a $17.4-billion bailout program, Toyota and Honda have not been dogged by consumer concern about their survival, Johnson said.
The weak performance by the industry's stronger players points to the pressure on consumer confidence, he said.
"The story of the industry continues to be a widespread reluctance to purchase durable goods at this point," Johnson said.
CHEAP DEALS, FEW TAKERS
Chrysler Financial, the financing arm of Chrysler, rolled out zero-percent loans on a wide range of vehicles in late January after receiving a $1.5-billion loan from the U.S. Treasury.
Those incentives, combined with cash rebates and employee-level pricing, were intended to help the struggling automaker clear inventory equal to 115-days worth of sales at the start of January.
That inventory level of unsold cars and trucks on dealer lots was the highest for any of the major automakers, according to data compiled by the trade journal Automotive News.
Edmunds.com, an automotive Web site that follows the industry, forecast Chrysler's January sales would drop 48 percent from a year earlier. It forecast a 38 percent drop for GM and 30 percent fall for Ford.
David Thompkins, an Edmunds.com analyst, said although there was growing demand to replace older vehicles many Americans would turn to the cheaper used vehicles when they begin shopping again.
Some automakers, notably Ford, have held out the prospect that sales could recover toward the end of 2009 as an economic stimulus package being pushed by the Obama administration is expected to take hold.
But IHS Global Insight forecast that overall sales would drop to 9.7 million units on an annualized basis in January. That would represent the lowest monthly sales tally since 1982.
"There will be no 'Obama effect' on light vehicle sales just yet," the industry tracking service said in a note on Friday. "The winter freeze will continue in the light vehicle sales market in January."
