U.S. auto sales seen down in December

Automotive News | January 2, 2008 - 4:40 pm EST

DETROIT (Reuters) - Housing woes and high gas prices likely combined to send U.S. auto sales to a weak finish in December, capping the industry’s worst sales year in a decade and increasing pressure on U.S. automakers to cut production further, analysts said on Wednesday.

The forecast decline in U.S. vehicle sales in December comes at a time when concerns are mounting that a slowing U.S. economy may tip into recession this year and cause consumers to postpone big-ticket purchases.

Major automakers will release December sales data on Thursday.

On an annualized basis, the December sales tally is expected to come in weaker than the sales rate of 16.1 million forecast for all of 2007. That would highlight the risk that vehicle sales in 2008 may slump further than the 15.5 million rate predicted by many analysts.

"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," said Bear Stearns analyst Peter Nesvold in a note to clients.

New U.S vehicle sales for December are expected to come in at a seasonally adjusted annual rate of between 15.4 million and 15.9 million vehicles, according to analysts. That would be down from last December’s 16.7 million vehicle rate and the 16.2 million rate posted in November.

Full-year 2007 light vehicle sales should be about 16.1 million, the lowest since 1998, analysts said.

"We expect 2008 vehicle sales to fall further, as participants in the automotive economic cycle are likely to go back to the older recession playbook," Lehman Brothers analyst Brian Johnson said, adding that automakers may not step up incentives but let production fall and use "the opportunity to further reduce structural costs."

In December, sales of General Motors vehicles are expected to decline in the range of 6 percent to 13 percent while most analysts expect Ford Motor Co. sales to slip between 7 percent and 13 percent in December.

Sales of Chrysler LLC are expected to fall about 8 percent, according to analysts.

Toyota Motor Corp., whose sales rose 3.2 percent through November, is also forecast to post a decline in sales, about 4 percent, while Japanese rival Honda Motor Co. could have a 1 percent increase, according to an analysis by Lehman Brothers.

Edmunds, which tracks the industry, said U.S. manufacturers’ market share likely dropped to 52.3 percent in 2007 from 55.2 percent in 2006 with Japanese automakers picking up most of that lost share.

Honda’s market share last year grew from 9.1 percent to 9.7 percent while Toyota’s climbed from 15.3 percent to 16.3 percent, according to Edmunds.