High gas prices combined with an increasingly tight credit market pushed new car sales to record lows in the May through August months, but turmoil on Wall Street pushed things even lower in September. Auto sales dropped of significantly last month, with virtually every automakers seeing significant drop offs. Although 2009 was once seen as the year for recovery by most automakers, September’s trend will likely continue through 2009, pushing any hope for a recovery back until at least 2010.
New car sales slipped by more than 26 percent in September, pushing most 2008 forecasts to 13 million units – far off the pace of 2007’s 16.2 million units. Moreover, that hangover is expected to continue into 2009, with most analysts predicting a 13 million to 14 million unit 2009.
But just how bad is the current situation? September sales totaled less than 1 million units, the industry’s lowest point since February 1993, according to Automotive News. Toyota – the industry’s poster child for new cars sales – saw new car sales tumble by 32.3 percent in September, the automaker’s large sales decline in 20 years.
And with the economy in shambles and the credit crunch getting worse by the day, there doesn’t seem to be any relief in sight. Consumers continue to be wary of the U.S.’ declining financial situation and even some of the most qualified buyers are being rejected for auto loans. These factors are combining for a gloomy 2009 outlook.
But the fact that consumers won’t be buying many cars in 2008 and 2009 should actually set the stage for a recovery in 2010. Analysts predict pent-up demand will bolster new car sales in 2010, helping automaker get back on the right track. “That drag is likely to continue for the rest of the year regardless of the rescue package” Bob Schnorbus, an industry analyst for J.D. Power and Associates, told Automotive News. “Once you get pent-up demand, you can get a nice (recovery).†But with new car sales reaching 20 year lows, it could be difficult for some struggling automakers to even hang on until help arrives in 2010.
