The credit crunch and global recession continues to destroy demand for cars in the US and Europe and everywhere else for that matter.
When the US Federal Reserve said after last week’s first meeting for the year that economic conditions in the US had worsened since its meeting in December, analysts were not sure just how bad the decline was.
Today, we have confirmation that if anything, the US car industry is in a deeper in a black hole at the start of 2009 than it was at the end of 2008, despite huge production cuts, cost cuts and billions in government aid to General Motors and Chrysler.
Banks have been recapitalised and lending encouraged, but corporate and private buyers remain on the sidelines, despite some astounding discounts and financing bribes to lure punters.
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Locally, the Federal Government’s December bonus sidestepped the car industry with sales last month falling a nasty 18.5% after December’s double digit drop.
Figures today from the Federated Chamber of Automotive Industries (FCAI) showed the extent of last month’s fall.
The Chamber said 67,079 new vehicles were retailed last month, a fall of 18.5% compared with January of last year. But that’s no where near as bad as the plunge in the US.
US car sales fell 38% in January, worse than expected and even worse than the terrible 36% plunge in December (US sales fell 18% over 2008, with the losses accelerating in the closing five months of the year).
Chinese sales are falling, 2008 sales rising 6.7% on 2007 when they jumped by more than 21%. They were supposed to hit an annual 10 million by the end of last year, but instead 9.5 million were sold.
January sales were forecast to run at an annual rate of more than 10 million units, or more than the US annual rate for last month.
This slump has seen Toyota finally become the world’s biggest manufacturer, overtaking General Motors as its sales fell at a slower rate than GM. Now it seems more cars are being made in China, whether that continues for much longer remains to be seen as China is still slowing as well.
The news from GM for January was terrible: sales down 49%, while Ford saw a 40% plunge (including Volvo). Toyota was down 34%, Honda 28%. Nissan was off 30%.
But the worst was Chrysler, with sales off a huge 55%. No wonder it needs the Government money.
Slumping sales of cars to US fleets and rental groups helped drive the larger than expected fall. Not even steep discounts, zero financing and other incentives could persuade private or corporate buyers to boost purchases. GM said fleet sales were down an astounding 80%, Ford’s fell by around 65%.
GM said sales to individuals were off 38%, Ford said its retail sales fell 27% in the month.
GM estimated the industry’s annualised selling rate for cars at 9.8 million in the US in January, down from 10.3 million in December, and less than China’s estimated annualised selling rate of 10.7 million.
It was also less than GM’s reduced annual forecast of 10.5 million units, and under the worst case scenario it used in arguing for aid from the US Government.
GM and Chrysler are working on restructuring plans due by 17 February as conditions of their $US17.4 billion of US government loans.
GM and Ford said much of the slide in sales to sharply lower purchases by fleets. Car rental companies typically take vehicles on just-in-time delivery, and most US car plants were idle for much of last month on extended holiday shutdowns.
Ford, which is not receiving emergency aid, also said that total car sales in the US slipped below an annual rate of 10 million last month, as did Chrysler.
German brands, Porche and Mercedes-Benz brand both reported a 36% drop in sales. Volkswagen sold 12% fewer cars in the US last month after having a solid 2008. BMW sales fell 18.7% in the month as well.
But back home in Germany, the trio are doing it tough: German sales fell 14%, with orders down 13% and registrations off 16.2%. Exports plunged 39%, according to figures from industry groups.