U.S. new vehicle sales may decline about 9.2 percent this month as the slowing U.S. economy and slipping confidence make more consumers hesitant to buy new cars and trucks, according to a Jan. 26 Bloomberg News story by Alison Fitzgerald.

Sales are forecast to fall 15 percent from January 2000 at General Motors Corp., 17 percent at Ford Motor Co. and 16 percent at DaimlerChrysler AG's Chrysler unit, based on the average estimate of four analysts, Fitzgerald said. The three will lose market share as European automakers post gains and sales slip at a lower rate for some Japanese makers such as Toyota Motor Corp., according to analysts.

The results would mark the fourth monthly decline in a row as the U.S. economy slowed. Automakers also are facing a tough comparison to last January, one of the strongest months ever, and the start of a year with record sales of 17.4 million. Still, some analysts said January sales have been better than they predicted, buoyed by sales to fleet owners and to buyers thwarted by bad weather in December.

January's seasonally adjusted annual sales rate is forecast to be about 16.4 million vehicles, down from 18.2 million in the year-earlier month but still well ahead of the 15 million rate once considered the sign of a good month.

The strong showing could give Federal Reserve policymakers incentive not to cut interest rates further at their Jan. 31 meeting, or to impose a smaller rate cut than they might have otherwise, according to several analysts.

Cutbacks at Big Three

GM, Ford and Chrysler all have cut back their first-quarter auto production plans at least 17 percent because of slowing sales and the need to reduce inventories, according to Fitzgerald. Including overseas-based companies that make cars in the U.S., first-quarter production is expected to fall as much as 11 percent to 4.15 million vehicles from 4.66 million, Ward's Automotive said.

The University of Michigan consumer sentiment index fell to 98.4 in December, its lowest level in more than two years, according to Fitzgerald. The index is forecast to fall to 94.0 in January. Initial jobless claims this month have averaged 321,000, up from last year's weekly average of 302,500 claims, according to Labor Department statistics released Jan. 26.

Layoffs in the automotive industry, lower incentives, higher heating oil bills and the energy crisis in California are also contributing to lower sales, according to analysts. California has accounted for about 11 percent of total U.S. auto sales.

Outlook

There have been some signs, however, that the pressure may ease on auto sales. Stock market gains can encourage buyers, and the Nasdaq Composite Index is up about 12 percent so far this month while the Standard & Poor's index has risen about 3 percent.

Federal Reserve policy-makers surprised economists by lowering interest rates Jan. 3, and there has been a pickup in mortgage refinancing that can put more cash in buyers' pockets, analysts said.

Some analysts raised their sales estimates after GM executives said on a call last week that early January sales were ahead of the previous year, but the company cautioned that the trend might not continue the rest of the month.

If the industry maintains an annualized selling rate of 16 million throughout the first quarter, domestic automakers would likely have to boost production from their current plans to keep inventories at an acceptable level, according to some industry analysts.