When it comes to our nation's economic future, I am reticent to join the chorus of hyperventilating worrywarts wringing their hands at the approach of fiscal Armageddon. But one thing is clear -- the impact of a shell-shocked credit market hit car dealerships in full force this September with predictably grim results.
On average, sales for September were off by over 27 percent from a year prior. Overall sales volume for September totaled 965,160 units - the first month in 15 years to sell fewer than one million units industry-wide.
Ford Motor Company posted their 10th straight month of declining sales as its three domestic divisions dropped 34 percent. Chrysler LLC sales fell 33 percent and General Motors was down 16 percent.
European and Asian automakers also suffered. Porsche sales were off by nearly 45 percent from a year ago. BMW Group sales fell nearly 26 percent. Suzuki and Mitsubishi sales fell 47 and 39 percent respectively, trailed closely by Mazda, Nissan and Toyota.
No automaker posted an increase. Only German automakers Volkswagen AG and Daimler AG were able to limit their declines to less than 10 percent.
Sales results were released today as the Senate prepared to vote tonight on a revise $700 billion bailout plan to rejuvenate lending by purchasing the toxic mortgage-related securities left behind by the collapse of the sub-prime mortgage industry.
Credit crunch hampers dealer financing
As the drama on Capitol Hill and Wall Street has played out, buyers have postponed big purchases. And dealers say buyers with good credit ratings are being denied loans more often.
"In the past, we were accustomed to financing 70 to 80 percent of our cars sold," Jim Weisbecker, general manager for Belle Glade Chevrolet in Florida, told Automotive News on Tuesday, Sept. 30. "Now we finance about 20 percent, if that. It has been a drastic turnaround."
Jim Fosche, sales manager at Buddy Foster Chevrolet in Zephyrhills, Fla., said volume at his store plunged 50 percent last month. He blamed the credit crunch and job worries.
Future remains grim as Big Three attempt to restructure
For the faltering domestic automakers, weak sales and tight credit couldn't come a worse time.
Combined, the Big Three have cut tens of thousands of jobs since 2006. Many GM and Chrysler plants have been idled for weeks at a time this year to slow production of slow-selling pickup trucks and sport utility vehicles.
Compounding the problem, billions of dollars in cash reserves are being spent to finance new products as well. General Motors lost $15.5 billion in the second quarter of 2008; Ford lost $7.8 billion.
[Photo: Flickr.com; Original by Broken Wing Productions. Post-processing by David Moll.]