Chrysler’s April sales drop 48% from a year ago
The pace of auto sales in America last month remained at its lowest rate in decades, making only more difficult the attempt by Chrysler to escape from bankruptcy quickly and by General Motors Corp. to avoid a similar fate.
U.S. sales of new vehicles plunged 34.4% to 819,540 in April compared with the same month a year earlier, according to manufacturer reports compiled Friday by Autodata Corp.
“There is just no sign here of any rebound for the carmakers,” said economist Peter Morici, a professor at the University of Maryland.
Consumers bought new autos at an annual rate of about 9.3 million in April, a bit slower than in March and a touch faster than in February. Regardless, 2009 is shaping up as the worst year for auto sales since 1963, when Americans purchased only 9 million new vehicles, according to automotive information company Edmunds.com.
Auto executives said the industry was dragging along the bottom of an economic trough. They don’t know when it will get better, but they don’t think the market will turn appreciably worse.
Chrysler, which on Thursday filed for Chapter 11 bankruptcy organization and signed a deal to hand over its management to Italian automaker Fiat, did much worse than the industry average. Its U.S. vehicle sales plunged 48.1% to 76,682 cars, truck and sport-utility vehicles in April compared with a year earlier.
Part of the steep decline represented efforts by the troubled Auburn Hills, Mich., company to escape from its reliance on fleet sales to rental car companies and government agencies as Chrysler attempts to focus on the consumer market.
Chrysler lawyers made their first appearance in a New York court Friday to start a bankruptcy process the government hopes will last no more than 30 to 60 days. On Monday they will ask Judge Arthur Gonzalez to let Chrysler start using $4.5 billion in loans from the U.S. and Canadian governments to keep operating under bankruptcy protection.
Concern about Chrysler’s and GM’s financial stability, along with tight credit, kept consumers on the sidelines in April, Morici said. This cloud was apparent in the pattern of auto sales in recent weeks, said Ron Pinelli, president of Autodata, the Woodcliff Lake, N.J., auto information company.
“March ended pretty strong and April got off to a good start, but sales started to trail off as there was more talk about possible bankruptcies,” Pinelli said.
GM, which is trying to avoid Chrysler’s fate as it faces a government-set restructuring deadline of June 1, saw its sales fall 33.1% to 171,258 in April compared with a year earlier.
Ford Motor Co. did the best of the American-owned domestic manufacturers. Its sales dropped 31.3% to 129,476 vehicles. But even as it was losing sales, Ford’s share of the U.S. auto market climbed almost a full percentage point to 15.8% from a year ago as it appeared to steal share from Chrysler and even Japanese auto giant Toyota Motor Corp.
Ford said sales of its mid-size Fusion jumped 22% from a year ago as customers shifted from trucks and SUVs to smaller automobiles. New gas and hybrid versions of the Fusion helped sales climb. The Fusion was the nation’s third-strongest-selling mid-size sedan, trailing only the industry standbys Honda Accord and Toyota Camry. It was the only one of the three to log a sales increase.
“We continue to operate in a very challenging economic and competitive environment,” said Ken Czubay, Ford’s vice president of sales and marketing. “Especially given this external environment, we’re very encouraged by the consumer response to our new mid-size sedans.”
Ford outsold Toyota Motor Sales USA Inc. for the first time since March 2008.
Toyota sales plunged 41.9% in April to 126,540 because of large declines in its Prius, Camry and Corolla business.
Toyota is dealing with reluctant customers such as Carolyn Dyer, a part-time sales representative from Van Nuys. Frustrated by the three transmissions she has had to put into her 2003 Camry, Dyer said she would like to buy a fuel-stingy car such as the Prius but was shocked by the price the dealer was asking for the hybrid: $27,000.
“It is just too expensive,” Dyer said. “I would like a ‘green’ car like a Prius, or maybe even an electric car, but when you add in the tax, insurance and maintenance, I just can’t do it.”
Decisions like Dyer’s are taking their toll on the company’s dealers. Puente Hills Toyota sold about 100 vehicles last month, down 63% from the 271 sold in April 2008, said owner Fritz Hitchcock. The dive in sales there and several other dealerships he owns forced Hitchcock to lay off 250 employees in the last eight months, about a third of his workforce.
Of all the major automakers, American Honda Motor Co., the Torrance-based U.S. division of the Japanese automaker, fared the best. Its sales fell by a comparatively small 25.3% to 101,029.
“Overall sales are, by far, the highest we have seen so far this year,” said John Mendel, executive vice president of sales for American Honda.
Honda, however was an exception, rather than the rule.
The challenge for the industry is to figure how to get customers such as Rich Flynn, a Huntington Beach retiree, back into the showroom. Flynn owns two Fords: a 2002 Explorer and a 2004 F-250 pickup.
“We have been considering a new F-150, but with the fall in value of our IRA and 401(k) it doesn’t seem to be prudent at this moment,” Flynn said.
Both of his Fords have less than 50,000 miles and run fine, so for now “we’re waiting.”
The other automakers face similar issues. Slumping sales also have caused layoffs at the network of car shops run by David Conant, chief executive of Conant Auto Retail Group, which owns Norm Reeves Honda Superstore in Cerritos, Cerritos Ford and six other Southern California and San Diego dealerships.
Conant has cut the workforce to 750 from 900 in recent months.
“We have never had to do that before,” Conant said. “It was really painful, but we had to do it to survive.”
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The Associated Press contributed to this report.
