US auto sales fall for many firms beyond Big Three

Toyota, Honda, and BMW report declines of 30 percent or more in December.

By , Staff writer of The Christian Science Monitor

The auto industry's downturn is not a Detroit problem, it's affecting companies around the world.

As the automotive industry closed out the 2008 calendar year, brands like Toyota, Honda, and BMW joined the US-based carmakers in reporting sizable sales declines. During the month of December, all those companies reported that sales were down 30 percent or more from the same month a year before.

It's a sign that the industry's problems are rooted heavily in the wider recession for US consumers, not just in the long-term challenges of product mix and labor costs that burden America's homegrown automakers.

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The shared sacrifice doesn't make things any easier for the Detroit Three: General Motors, Ford, and Chrysler. GM reported a sales drop of 31 percent Monday, while Ford said its sales volume was down 32 percent. Chrysler's sales fell 53 percent in December.

The auto industry gets hit early and hard during recessions. That's because cars are big-ticket purchases that consumers can choose to postpone. In the current economic downturn, a range of factors have piled on: once-high gasoline prices, a squeeze on the availability of loans, and the decline in household wealth rooted in the drops in the housing and stock markets.

Government policymakers are riding to the rescue – for now at least – with emergency loans of up to $17.4 billion to GM and Chrysler.

"Getting the loan is an important first piece of the puzzle but will not be enough on its own," Jeremy Anwyl, chief executive of the automotive information firm Edmunds.com, said in a recent analysis.

He said the sales plunge challenges the viability of all carmakers, and he recommended two further policy steps: a stimulus package to give wary consumers an incentive to buy cars now and an energy policy that helps over the longer term to shift consumer demand toward energy efficient vehicles.

With or without such moves, the Detroit carmakers will have plenty of heavy lifting to do. They've already been downsizing and pushing the United Auto Workers union to reduce the burden of healthcare benefits promised to past generations of workers. But more factory consolidating, streamlining of product lines, and paring of labor costs and union work rules lie ahead, analysts of the industry say.

The incoming Obama administration is expected to provide further help, with conditions, as the industry invests in clean-car technologies for the future.

A recent downturn in the price of oil hasn't pushed car buyers back into the showroom, and it's not expected to change the momentum for the shift toward fuel economy and new technologies.

George Pipas, Ford's top sales analyst, predicted that passenger cars will outsell trucks in the US this year for the first time since 2000 as consumers continue to be wary of high gasoline prices.

Not every carmaker has seen its US sales decline this year, but the overall pace of car sales has fallen to a quarter-century low.

For calendar 2008, GM's sales were down 23 percent from the year before; Ford's sales fell 21 percent, Toyota's fell 16 percent, and Honda's declined by 8 percent.

Sales were weak in December despite a record use of incentives to lure buyers to showrooms, according to Edmunds.com.

The automotive recession is worldwide, but the trouble in the large and normally lucrative US market has hit companies such as Toyota particularly hard.

"We are all in trouble without an American recovery," Shoichiro Toyoda, the company's honorary chairman, said. "The American economy has a big impact on the world."

Material from the Associated Press was used in this report.

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