January Vehicle Sales Surprise Automakers
Americans bought new cars and sport utility vehicles last month as though the economy were booming, surprising auto executives worried about plunging consumer confidence and an economy that has slowed almost to a standstill, according to a Feb. 2 story by Keith Bradsher in The New York Times.
Automakers sold cars, vans, SUVs and pickups at a seasonally adjusted annual rate of 17.2 million vehicles in January, compared to the pace of 15.4 million vehicles set in December. The auto industry traditionally considers anything above 16 million to be a strong month.
Sales were down 6 percent from those in the month a year earlier, when the industry was enjoying an extraordinary boom. For all of last year, automakers sold a record 17.4 million cars and light trucks.
Good weather and large shipments of cars to corporate and government fleets probably played some role in the rebound in sales after December, said George Pipas, Ford Motor's director of United States market analysis, adding that the true strength of the market was probably between the December and January levels.
The auto sales figures were released on the same day as a report showing that United States manufacturers cut their production sharply in January.
The auto market's strength in January produced one immediate benefit for the economy in the Midwest: no automakers announced further cuts in their targets for production in the first quarter after doing so repeatedly in December and early January. GM, Ford and Chrysler officials did say Feb. 1 that they would idle several factories for a week or two this month but added that these production cutbacks were part of plans set in early January to reach the first-quarter targets rather than a further retrenchment, according to the Times.
GM, Ford and Chrysler have been idling factories for a week or two at a time and furloughing the workers. Chrysler announced on Jan. 29 that it would reduce its work force by 26,000 people over the next three years, partly by laying off up to 7,100 people in the U.S. and Canada and 3,100 in Mexico and South America.
GM's sales fell 5.1 percent last month, while Ford's dropped 11.6 percent, and sales at Chrysler tumbled 16.2 percent. GM prospered partly because of enormous shipments of cars to fleets; according to Paul Ballew, executive director of market analysis at General Motors, the company's extra fleet sales alone had increased the seasonally adjusted annual rate of sales in January by 200,000 vehicles.
He also cautioned that January and February are weak months for auto sales, making it hard to draw conclusions.
But GM also did extremely well in selling full-size SUVs, which are mostly sold at high profits to families and not to fleets, which typically buy unpopular models available at deep discounts. GM's sales of full-size sport utilities jumped 18 percent even as Ford's sales of them dropped more than 20 percent.
Dieter Zetsche, the former Mercedes executive sent from Germany two months ago to become Chrysler's chief executive, said in a Feb. 1 statement that uncertainty preceding the layoffs announced on Jan. 29 had hurt the company's sales in January.
Foreign automakers had a mixed performance in January, as some benefited from new models and from the strength of the dollar against the yen and euro, which made it much cheaper to import cars and car parts to the U.S.
Mitsubishi's sales jumped 15.2 percent, Honda's sales grew 11.1 percent and BMW's were up 9.8 percent. But Nissan's sales dropped 4.4 percent, the Mercedes unit of DaimlerChrysler had a 7 percent dip and Toyota's sales were down 11.4 percent.
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