Ramifications of Auto Sales Plunge: October numbers worst in quarter century

The ramifications of October's auto sales plunge are being analyzed throughout the industry. Following on the heels of a moribund September sales report, the latest figures are sending alarm signals through Detroit board rooms where GM, Chrysler and Ford are working studiously to curtain ballooning inventory by aligning production with plummeting demand.

Despite efforts in Washington to ease the current credit crisis, consumer confidence has not been restored. GM's VP for North America Vehicle Sales, Service and Marketing Mark LaNeve said this week, "We believe there is considerable pent-up demand from the last three years, but until the credit markets open up and consumer confidence improves, the entire U.S. economy, and any industry like autos that relies on financing, will suffer."

GM is looking to cut fourth quarter production as much as 15 percent to avoid having excessive inventory by year's end. Ford and Chrysler will be making similar production adjustments. Some analysts are suggesting a 25-percent slash in production may be necessary. This shrinking effect continues to impact company auto workers, suppliers and dealers, spiraling down into local economies across the country.

The basic concern is how long individual automakers will be able to sustain major sales losses without an infusion of cash or a declaration of bankruptcy - a situation that varies from company to company.

The October U.S. sales numbers were downright ugly for most major automakers.

GM's 45.1-percent sales decline compared to Oct 2007 was the loss leader but was considered a correction for the automaker. In September, the publicity surrounding GM's centennial celebration helped keep sales losses for the month around 15 percent - just over half the industry-wide hit.

Ford/Lincoln/Mercury sales declined 29.2 percent in October, a slight improvement over the previous month (33.7 percent). Ford Motor Company's overall performance continues to be impacted by Volvo, which suffered a second straight monthly sales decline of more than 50 percent.

Chrysler LLC sales were down 34.9 percent; Nissan, 33.0 percent; American Honda, 25.2 percent; and Toyota, 23.0 percent.

Sales of vehicles from smaller importers were all over the chart. VW sales dropped 6.3 percent, while Porsche was down 50.1. BMW Group lost 5.0-percent; Daimler AG, 24.5. From the Pacific Rim, Hyundai Group took a 34.5-percent sales hit; Mazda, 25.9; Mitsubishi, 19.3; Subaru, 13.8; and Suzuki, a whopping 46.7 percent.