October Auto Sales Slump

Southfield (WWJ)  -- Analysts expected October to be a bad month for car and truck sales.  The reality was even worse.

Overall car and truck sales dropped 31 percent from October of 2007, to hit an annual sales rate around 10.8 million units.  That's a level that was last seen in 1982.

"This is a very bleak situation.  I'll be blunt with you," says Mike DiGiovanni, General Motors Director of Industry Analysis.  GM reported a 45 percent sales drop.  DiGiovanni blamed most of that on declining consumer confidence, and said that only a little had to do with sales being pulled ahead by a big "Employee Discount" sale in September.

"You look at population adjusted numbers, this may be the worst month in post-World War II history," said DiGiovanni, who pointed out that the U.S. had a much smaller population, and fewer potential car buyers the last time sales were this low, in the early eighties.

All major automakers posted sales drops.  Chrysler's October sales were down 35 percent.  Ford was down 29 percent, Hyundai down 30 percent.  Even Toyota, which had very large incentives, saw its sales off by 23 percent.  That kept Toyota from outselling General Motors, as some analysts had predicted.

Major dealers had to deal with empty show rooms for much of the month.

"The whole month of October was rather dismal for us, in terms of traffic levels," says Bob Thibodeau, owner of Bob Thibodeau Ford in the Detroit suburb of Centerline. "People are very concened.  We've just seen traffic--kind of--dry up."

Carl Galeana, who owns Van Dyke Dodge in the Detroit area, as well as dealerships in the southeast, says returning lessee's helped his business in Michigan.  But there was little to help him elsewhere.

"I'm pretty hard hit in the southeast, with the housing market in both Florida and South Carolina.  But, at least we're getting traffic here."

Dealers and manufacturers said economic concerns were driving away all but the most secure buyers, and those who absolutely needed a new vehicle.  The credit crunch also eliminated some buyers who's credit was less than stellar. 

DiGiovanni said the government has to give some help to the auto industry, to free up credit, and get consumers into the showrooms.

"This is an unsustainable industry level for all manufacturers," said DiGiovanni.   "GM, Ford, Chrysler, Toyota, Honda, Nissan, Mercedes, BMW, go down the line, none of us can operate at these levels."