Sales Off 11.8%, but Auto Firms See Light Ahead
Sales of cars and trucks in March fell 11.8% from a year ago, auto makers reported Thursday. And although sales rallied from the wartime lows of January and February, the recession and tight credit continued to hammer the auto industry.
Imported and domestically built vehicles sold at a seasonally adjusted annual rate of 12.4 million, compared to February’s low 11.8 million. A year earlier, vehicles sold at an annual rate of 13.9 million.
“It’s not a powerful recovery, but there is a slight improvement,” said David Healy, an analyst at Barclays de Zoete Wedd in New York. “With the drop in gas prices, the drop in interest rates and increased consumer confidence, I think we may continue to see a slow recovery in auto sales.”
Despite the strengthening of consumer confidence after the end of the Persian Gulf War, analysts say, the recession has continued to take its toll on the auto industry.
Some banks, showing extra caution in the uncertain economic climate, have tightened their credit standards, making it harder for consumers to get auto loans. About one in six banks recently surveyed by the Federal Reserve Board said they were less willing to make consumer loans.
Thomas Webb, chief economist for the National Automobile Dealers Assn., said tighter credit standards translate directly into fewer car sales. The proportion of car loan applicants getting turned down has more than doubled from the 10% to 15% of normal times to 30% to 35% now, Webb estimates.
“The banks and (car maker) finance companies are asking for more up front in terms of a down payment too,” Webb says. “So more people are not even submitting applications, because they know they can’t make it.”
Mike Angly, a sales manager at El Cajon Mitsubishi, blamed the banks in part for the dealership’s mediocre sales in March.
“They’re looking a lot closer at deals. They’re scrutinizing them,” Angly said. “It’s like they’re looking for reasons to turn them down instead of for reasons to approve them. Previous Marches have been boom months. This one was a dramatic disappointment.”
John Andrews, spokesman for General Motors Acceptance Corp., GM’s financial arm, insisted that the company’s loan rejection rate has not changed.
“We’re in business for one sole purpose, and that’s to help GM sell cars,” Andrews said. “You don’t do that by turning down loans.”
GM, Ford Motor Co. and Chrysler Corp. posted a combined year-to-year sales decline of 13.7% in March, compared to a 5.8% decline in vehicles sold by the Japanese “transplant” companies.
AUTO SALES Seasonally adjusted annual rates for U.S. sales of cars and trucks. Domestic figures include vehicles built in the United States by Japanese auto makers. The figures use seasonal patterns to predict the auto industry’s sales rate for a full year.
In millions of cars 1990 JAN: 15.3 FEB: 13.8 MAR: 13.9 APR: 23.8 MAY: 13.7 JUN: 14.3 JUL: 14.2 AUG: 13.7 SEP: 14.4 OCT: 13.5 NOV: 12.7 DEC: 12.7 1991 JAN: 11.1 FEB: 11.8 MAR: 12.4 After stumbling in January and February, Honda, maker of the best-selling Accord, rallied in March to sell 74,961 cars, 9.5% more than last year.
Chrysler’s minivans, buoyed by a new ad campaign, surmounted last month’s bad press about transmission trouble to post a 39% year-to-year sales increase.
The Big Three U.S. auto makers posted a combined 13.7% drop in sales, while the Japanese auto makers’ sales dipped 11.5%.
The pace of car sales picked up slightly in the last 10 days of the month.
