Sales of cars and light trucks in the U.S. fell to their lowest level in almost a decade last year -- and the first half of 2008 isn't likely to be much better for automakers.
They reported Thursday that vehicle sales in 2007 totaled 16.1 million, off 2.5% from 2006 and the smallest annual count since 1998, according to figures compiled by Autodata Corp. Their forecasts for this year were downbeat, with the head of the country's No. 1 car company, General Motors Corp., saying he thought the economy would push GM sales lower in the next six months.
Industry analysts agreed with the bleak assessment.
"The first half of the year is going to be very difficult," said Mark Zandi, chief economist at Moody's Economy.com. "The job market is weakening, home prices are falling, the stock market is going nowhere fast and gasoline prices are headed higher."
Zandi said automakers would have trouble selling even 16 million vehicles this year.
Last year ended on a down note, with overall December sales off almost 3% and every major automaker except Chrysler and Honda Motor Co. reporting lower sales compared with the same month in 2006.
High gas prices, which remain stubbornly above $3 a gallon, continue to hurt sales of big sport utility vehicles and pickup trucks, which in better times were major sources of profit for the American auto companies. Pickup sales have also been hurt by the downturn in the home-building industry, a major truck customer.
Rick Wagoner, GM's chief executive, said he thought industrywide sales would be weaker in the first half of 2008 than in the first half of last year.
"There are some obvious reasons for concern," Wagoner told reporters, "but on balance I suspect '08 will be similar to '07 in total, although likely weaker in the first half and stronger in the second."
Ford Motor Co. said it expected the "economic environment to remain challenging in 2008." And Toyota Motor Corp. -- which surpassed Ford last year to take the No. 2 spot in U.S. sales -- trimmed its forecast for 2008 to a 1% gain.
But barring a severe economic slump, new product introductions could help prop up sales later this year, said Jesse Toprak, a sales analyst at Edmunds.com.
Redesigned versions of the Ford F-150 and Dodge Ram pickups are due, as is a redesigned Toyota Corolla. GM is rolling out hybrid versions of some of its big pickups and SUVs that could boost sales.
At the end of 2007, strong sales of the redesigned Chevrolet Malibu were a bright spot for GM.
Orders for the mid-size sedan have outstripped supplies in some markets, Toprak said, a notable feat given that the car is competing directly against new versions of the Toyota Camry and the Honda Accord.
In December, GM said, sales were down 4.2%. However, retail sales were up 1.5%, with planned cutbacks in fleet and rental car sales accounting for the overall decline. For the year, GM sales were down almost 6%.
Chrysler, which ended the year under new ownership and new management, credited strong demand for its redesigned Town & Country and Dodge Grand Caravan minivans with pushing its sales up 0.5% in December. The company said it hoped to increase sales this year; in 2007, they declined 3%.
Toyota's sales fell 1.7% in December and were up 3.1% for the year. Honda's sales were virtually flat for the month -- up 14 vehicles from December 2006 -- and up almost 3% for the year. Nissan sales were off 2.4% in December and up 4.8% for the year.
The news was bleaker at Ford, which recorded a 9.5% drop in December sales and a 12% drop for the year. The monthly report included a 13% drop in retail sales. Ford reported strong demand for its popular Edge crossover SUV, but sales of its flagship F-150 plummeted 22% during the month.
Toyota bumped Ford from the No. 2 position the venerable auto company had occupied since 1931, when GM displaced it as America's top-selling automaker. Toyota had led Ford for much of the year in U.S. market share, and analysts said it was more important for the U.S. companies to reverse the flow of red ink that has swamped them in recent years.
"The key point is that Toyota overtook all of the U.S. automakers years ago in terms of profitability," said Gregg Lemos-Stein, an auto industry credit analyst with Standard & Poor's. "The sales rankings don't mean much in terms of comparison."
The weak sales report adds to the pressure being put on the Federal Reserve to lower its target interest rate when it meets Jan. 31, Zandi said.