U.S. Auto Sales Plunge in February: Big hits for Detroit3

U.S. auto sales in February hit lows not seen in 28 years. Sales plunged 41.3pct compared to last February, bottoming out at 689,444 light vehicles sold for the month. With the stunning exceptions of Hyundai Group and Subaru, every U.S. seller took double-digit sales hits in February - the third straight month the industry reported a 35pct-plus overall sales decline.

General Motors' sales were down a crushing 53.1pct to 126,170 units. As February has but 28 sales days, the month's adjusted sales figure actually represented a small increase of some 7k vehicles over January 2009. That's about the only good news for GM as the company recently reported a fourth-quarter loss of $9.6 billion and an annual loss of some $31 billion for 2008 - the second worst year in company history. Save for a quick industry turnaround, a buckled-down, reorganizing GM will be flirting with insolvency throughout the remainder of 2009 with continued government support crucial to survival. Adjusting to the market, GM will produce only 550k vehicles in the second quarter - 34pct fewer than the same period last year. Troubled subsidiaries Saab and GM Europe (Opel/Vauxhall) continue to drain GM resources overseas with Saab now in bankruptcy reorganization.

Toyota's drive to overtake GM in U.S. light vehicle sales is stuck in neutral. The giant automaker (including Toyota, Lexus and Scion) moved 109,582 units in February - off 39.8pct from February 2008. With its worldwide sales down a similar percentage in February, Toyota is reported to be requesting aid from the Japanese government.

Ford retained the number 3 slot in U.S. auto sales in February despite dipping below 100k units moved - 99,050, down 49.5pct from February 2008. The company is adjusting its second quarter production down some 38pct to 425k units and continues its strategy of reducing low-profit fleet sales. Despite generally stable fuel prices, the once dominant F-series pick-up took a 55pct sales hit in February.

Struggling Chrysler suffered through another indifferent sales month, moving but 84,050 light vehicles in February, down 44pct from a year ago. The company continues to refocus its retail efforts, cutting fleet sales by 71pct in February. Chrysler's retail sales actually were up 26pct over January's numbers.

American Honda, including Acura, suffered a 38pct sales decline in February to 71,575 units. On a positive note, the economical Fit bucked the trend, registering a 2.3pct sales increase.

As mentioned above, Subaru posted the only positive U.S. sales report for February. Led by its Forester SUV, the company logged a sales increase of 1.4pct year-over-year, selling 13,089 light vehicles. For 2009, Subaru sales are up 4.5pct. The Japanese automaker offers five models of the versatile Forester, ranging in base price from $19,995 to $28,185.

Hyundai Group including Kia also continues to shine in the otherwise moribund U.S. auto arena, joining Subaru as the only two manufacturers with positive sales numbers for the year - Hyundai being up 3.6pct overall since Jan. 1 despite a less than 1pct dip in February. Subsidiary Kia's sales were virtually flat for last month. The company captured the trust of auto buyers late last year with its Assurance warranty program which includes the promise to take back vehicles from customers who lose jobs post-purchase. Although few Hyundais and Kias have been reclaimed, the offer definitely struck a chord with consumers.

Nissan sales, including Infiniti, were off 37.1pct to 54,249 units in February, while Mazda took a 30.4pct hit to 16,401. Both Honda and Mazda are rumored to be lining up behind Toyota to secure operating loans from the Japanese government.

Mitsubishi and Suzuki posted major sales decreases in February - 50.8pct and 60.3pct, respectively.

As a group, the German automakers fared but slightly better that the Detroit3 and the Japanese.

Volkswagen - including Audi and Bentley - sold 18,382 units in February, down 19.9pct. BMW Group - including MINI and Rolls-Royce - moved 15,841 light vehicles, down 34.6pct. Daimler AG (Mercedes-Benz, Maybach and smart) sold 15,629, down 20.4pct. And Porsche moved 1,518 units, down 11.5pct.

Analysts are all over the lot as to when the world's auto industry will turn the corner but generally agree that stabilization of the international credit markets and subsequent hints of economic recovery remain the critical precursors. Meanwhile potential new car customers in the U.S. are tiptoeing through a minefield. Some are shopping the big basket of incentives and low-interest financing currently being offered on new cars. Some are opting for used vehicles. Still others are simply waiting it out, choosing to maintain their current cars and trucks.

As a result, supply-and-demand dynamics are adjusting the market at the dealer level. Edmunds reports that 27pct of new car shoppers end up purchasing a used vehicle. This extra demand drives up the price for used vehicles which in turn incentivizes dealers to accept more trade-ins because of their increasing resale value, a strategy that Ford is following. Ford's VP for U.S. Sales Ken Czubay observes this will move the market toward "a more natural balance between new and used."