U.S. auto sales in January likely stayed at quarter-century lows for the fourth straight month, as stable demand at dealerships couldnt make up for plunging deliveries to fleets.
Analysts surveyed by Automotive News projected a January seasonally adjusted annual sales rate of 10 million to 10.6 million cars and light trucks. General Motors forecasts a figure below 10 million, which would be the lowest since August 1982.
Analysts expect the biggest Japanese automakers to fare better than the Detroit 3 when companies release sales totals tomorrow.
North American production levels that were two-thirds lower than last years may trigger a 60 percent decline in fleet sales compared with a year earlier, said George Pipas, Ford Motor Co.s sales analyst.
At best, the sales rate will be around 10.3 million, Pipas said. The retail rate will be in line with recent months -- about 8.3 million units. Sliding fleet sales most likely will drag demand below a 10 million annual rate, he said.
Pain spread around
GMs projection of a January sales rate below 10 million stems entirely from reductions in fleet sales, Mike DiGiovanni, GM's executive director of global market analysis, said in a January conference call.
Analysts forecast Chrysler will repeat its 50 percent December decline from year-earlier levels, and GM will fall about 40 percent after a 31.2 percent decline in December. Both automakers are preparing viability plans for the U.S. Treasury Department to preserve the $13.4 billion in federal loans theyve already received.
Ford sales for January will drop by about a third, analysts say.
The auto information site Edmunds.com forecasts a 26 percent decline for Honda, a 27 percent tumble at Toyota and a 31 percent drop at Nissan, for an overall industry decline of at least 30 percent.
A rate below 10 million would crush any hope that demand hit bottom in November, when seasonally adjusted sales fell to a 26-year low of 10.3 million units. The figure rose to 10.4 million in December.
The auto industry is looking to rebound from its worst sales year since 1992 as the recession lengthens.
Last years U.S. light vehicle sales dropped to 13.2 million, dragged down by soaring fuel prices in the first part of the year and a global credit crunch later. In 2007, 16.1 million light vehicles were sold in the United States.
January fleet sales fell partly because of U.S. automakers extended plant shutdowns after the year-end holidays, analysts say. In addition, some corporations took advantage of GMs December fleet incentives. December fleet deals helped GM unload about 300,000 more vehicles than Deutsche Banks Rod Lache expected, the analyst said in a note to investors.
Januarys decline in fleet sales means the industry wasnt overbuilding, said Jeff Schuster, executive director of forecasting at the market research firm J.D. Power and Associates.
There have been significant cuts to keep production in line, and those cuts have been combined with not needing to use the fleet to move cars off the lot, Schuster said.
Januarys North American production fell 64 percent from year-earlier levels, and cuts are continuing. Last week, Honda Motor Co. reduced this quarters production by about 14 percent. GM eliminated 2,000 production jobs and instituted more temporary plant closings, and Mitsubishi Motors Corp. extended a shutdown of its U.S. plant to 12 weeks from seven.
The industry started 2009 with a 94-day supply of vehicles, more than 50 percent above the level recommended by analysts.
The continued troubles of fleet customers also could keep sales down. A bill to reform the Troubled Asset Relief Program, sent to the U.S. Senate last month by the House of Representatives, would allow the federal government to extend loans to automakers' fleet customers, including car rental companies. Last month, the Hertz car rental company cut 4,000 jobs, and Avis Budget Group Inc. cut 2,200 jobs in December.
I wouldnt expect to see the fleet business come back necessarily in February or March, Fords Pipas said.
Better news for retail sales
In contrast, retail sales have stabilized and may rise in coming months, analysts say. Edmunds.com says January purchase intent rose 13 percent from December. Last week, the Conference Board reported its highest monthly purchase intent data since April.
The figures reflect pent-up demand, said Jeremy Anwyl, CEO of Edmunds.com.
At some point, if you need a car, you need a car, Anwyl said. You kind of get used to the fact that youre 30 percent poorer.
Wholesale auction sales are also increasing, said Matt Nemer, an analyst with Thomas Weisel Partners.
I dont know whether its a head fake or this is real, said Nemer, referring to the rising traffic at auctions and on Web sites. It does feel like were trending a little better here.
Reuters contributed to this report.