Automakers may again report a U.S. sales decline of at least 25 percent for November as tight credit and concerns about the Detroit 3s survival kept demand at the lowest levels in a quarter century.
The drop will be the industrys 17th in the past 18 months.
The reports are due tomorrow, when cash-strapped General Motors, Ford Motor Co. and Chrysler LLC also must submit their turnaround plans to Congress to be considered for $25 billion in government loans.
The domestics are effectively already out of business, particularly GM, said John Casesa, an analyst at Casesa Shapiro Group LLC in New York. The combination of the economy and all the news on their problems just stopped them dead.
Edmunds.com and J.P. Morgan Securities Inc. project that GM will report a 28 percent drop. Deutsche Bank pegs GMs decline at 42 percent. All three forecasters say Ford will record a 33 percent decrease, and Chrysler was down more than 40 percent.
At Honda Motor Co., Executive Vice President Koichi Kondo said U.S. auto demand looked bad again in November. He reinforced analysts forecasts that Hondas decline would be only slightly narrower than the 28 percent drop posted in October.
Seeing the bottom
Theres a bottom somewhere, Kondo told Reuters in an interview Friday, Nov. 28. Id like to know where it is.
Edmunds.com also forecast a 24 percent slide at Toyota and a 29 percent plunge at Nissan.
The range of annual selling rates projected by 33 analysts surveyed by Reuters is 9.8 million to 11.5 million, with the average being 10.4 million.
That would be a half-million below Octobers rate, which was the lowest since March 1983. A year ago, the seasonally adjusted figure was 16 million units.
The November sales data will be watched in Washington, where lawmakers are scheduled to reconvene to review the restructuring plans submitted by the Detroit 3 and consider their request for emergency aid.
Analysts have said some form of government assistance is more likely than not amid growing concern about the risks to the U.S. economy if one of the Detroit 3 collapses.
The high-profile debate about the risk of a bankruptcy by GM or Chrysler could have hurt their sales in November, said J.P. Morgan analyst Himanshu Patel.
High gasoline prices and a weak housing market weighed on U.S. auto sales earlier this year. Since then, the decline has been pushed even steeper by the plunge in consumer confidence to near record lows in the wake of the credit market turmoil.
Month may be no worse
The most common comment we have received from dealers and other industry sources is that November looks a lot like October -- no better but also no worse, Deutsche Bank analyst Rod Lache said. He forecast an annualized sales rate of 10.5 million units for November.
Standard & Poors expects U.S. light-vehicle sales of 13.3 million units this year -- the lowest annual total in 15 years -- and 12.3 million units in 2009, down from 16.2 million in 2007.
Edmunds.com has forecast 850,000 sales for November, the third straight month below 1 million. Before the current stretch, industry volume hadnt been that low in more than 15 years. Septembers 26.6 percent decline was followed by a 31.9 percent fall in October.
The year-to-year decline in November sales would mark the 13th consecutive monthly drop in U.S. auto sales, extending a slump expected to run well into 2009.
The market will bottom out in the first quarter of next year, Tom Libby, an analyst at J.D. Power and Associates, said in an interview with the newscast Automotive News Today. After that, he said, sales gradually will strengthen.
Said Libby: We do see 2010 definitely being a recovery year.
Reuters contributed to this report.