Vehicle sales expected to fall for Dec.

Experts say weak housing, credit markets hit automakers and will carry into the new year.

Bryce G. Hoffman / The Detroit News

Analysts are predicting much weaker U.S. car and truck sales this month as the industry braces for an even tougher 2008.

Sales for the month are expected to be lower than November and significantly lower than December of 2006 as consumers react to a weakening economy and tightening credit markets.

Though results for the month will not be released until next week, analyst Peter Nesvold of Bear Stearns said the writing is already on the wall.

He is forecasting a seasonally adjusted annualized selling rate of 15.9 million units this month, compared with 16.2 million units in November and 16.7 million units last December.

Nesvold predicts sales will sink 7 percent compared with last December at General Motors Corp., drop 12 percent at Ford Motor Co. and fall 8 percent at Chrysler LLC.

All three Detroit car companies posted comparatively solid sales for December 2006, making the decline that much sharper.

Last month’s sales were also better than expected.

"While November (sales) surpassed expectations with a small year-over-year up-tick into deteriorating economic conditions, we nevertheless feel the long-resilient American consumer, increasingly mired in the worst housing downturn in two decades, is likely to slow purchases of big ticket items like automobiles — a view seemingly supported by recent sharp reductions in consumer confidence," Nesvold said.

Robert Barry of Goldman Sachs offered a slightly more optimistic projection of 16.1 million for December’s seasonally adjusted annual selling rate, but expressed concern that the same issues will continue to erode sales in 2008.

"While this SAAR number is far from suggesting robust demand, we would view it as ‘not bad’ given the significant headwinds facing the consumer, including high gas prices, housing weakness, and anxiety around the U.S. economic outlook," Barry said.

"We expect the selling environment to deteriorate materially next year; our 2008 sales forecast is 15.6 million, with even weaker levels likely in the first half," he added.

That would make 2008’s numbers much worse than the already dismal tally expected for 2007.

On Friday, the forecasting firm IRN Inc. released a report projecting full-year sales of 16.1 million units for 2007 — a 400,000-unit drop over 2006 totals.