Car sales plunge heralding bleak 2009

By Kevin Krolicki and David Bailey

DETROIT (Reuters) - U.S. auto sales plunged by 36 percent in December led by outsized declines at Chrysler LLC, Hyundai Motor (005380.KS: 行情) and Toyota Motor Corp(7203.T: 行情) as the battered industry closed out its weakest year since 1992 in its largest single market.

Chrysler's sales dropped by 53 percent in December, a month when the automaker and larger rival General Motors Corp (GM.N: 行情) fought to clinch a $17.4 billion bailout from the U.S. government.

Meanwhile, Toyota, the global industry leader, posted a sales drop of 37 percent for the month, its worst U.S. sales decline since at least 1980.

Hyundai's sales tumbled 48 percent and it responded with an unusual marketing campaign targeting shell-shocked U.S. consumers with an offer allowing them to return new cars if they lose their jobs.

The plummeting sales for December had been widely expected and were slightly better than some of the most dire forecasts. But the unrelenting slide in auto sales seemed certain to raise concerns about the depth of the ongoing recession in the early months of 2009.

"January and February are typically some of the slowest months for the industry volume historically and for March we are probably not going to see much of an uptick at all," said Edmunds.com analyst Jesse Toprak.

December sales for Honda Motor Co (7267.T: 行情) dropped 35 percent and Ford Motor Co (F.N: 行情) fell 32 percent. GM and Nissan Motor Co (7201.T: 行情) saw sales decline by 31 percent.

The sales figures were the first since the U.S. Treasury extended an initial $8 billion in loans to GM and Chrysler to avoid a cash crunch that both had warned was looming.

Auto sales in Asia and Europe, which followed the U.S. market into a sharp downturn in the second half of 2008, showed signs of a deepening slowdown as well.

Sales dropped almost 16 percent in France and fell 22 percent in Japan, after a record decline of almost 50 percent in Spain last week. German data is due later this week.

Automakers across the globe are struggling to reduce stock of unsold vehicles and have resorted to plant closures, job cuts and extended holidays for workers.

Ford, the only Detroit automaker that has not sought emergency government funding, said it was braced for initial sales results this year to extend the weakening trend that swept through the industry for most of 2008.

"The first several months of 2009 are going to feel very much like the last few months of 2008," said Ford economist Emily Kolinski Morris. "We see little to indicate a near-term improvement in either financial market conditions or economic activity."

On a full-year basis, U.S. auto sales fell to 13.2 million in 2008. That was down from 16.2 million in 2007 and the lowest annual result since 1992.

That 3 million-unit plunge in sales was also the steepest for the industry since 1974, when the U.S. economy was still reeling from the impact of the first oil shock.

Major automakers held out hope that the pace of the losses would ease after a year that saw business decline faster than even the most cautious forecasts.

GM said it expected to keep its 2009 sales forecast at between 10.5 million and 12 million vehicles, an outlook it offered last month in seeking a bailout from Congress.

"We're optimistic that it's a year that will at least gradually improve and not see the massive deterioration that we saw in the third and fourth quarter of 2008," GM sales chief Mark LaNeve said. [nN05407066]

Stephen Spivey, senior automotive industry analyst at San Antonio, Texas-based consultants Frost & Sullivan, said he expects the industry to hit bottom in the next six months.