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Auto sales hovered around 27-year lows in February as consumers mostly stayed away from buying big-ticket items, spooked by job losses, the deep recession and tight credit.
Major automakers are scheduled to announce February sales results on Tuesday.
Large dealers, auto executives and analysts have said that the sales trend last month mirrors that of January, when the industry-wide annual sales rate dropped to 9.57 million units, the lowest level since 1982.
Ford Motor Co’s chief analyst, George Pipas, estimates that U.S. auto industry sales dropped in February to a range of about 9 million units. Retail sales, or vehicles sold at showrooms, likely declined about 40 percent in February.
“The environment continues to be very challenging,” he said on Friday.
Citigroup analyst Itay Michaeli said weakness in sales to corporate and daily rental fleets has also added pressure to the already-soft retail volume, which may in turn be a strain on automakers’ production plans.
All major automakers — including General Motors Corp, Ford and Chrysler LLC — had significantly scaled back production of vehicles during the first quarter in the face of falling demand.
U.S. automakers were expected to provide targeted production figures for the second quarter on Tuesday.
“We expect GM and Ford to underperform the industry in February,” Michaeli said. “Continued anemic sales leave already decimated production schedules vulnerable to further cuts.”
The sales results for February are likely to show just how badly GM and smaller U.S. rival Chrysler need the additional $22.6 billion federal aid they have requested.
KeyBanc Capital Markets analyst Brett Hoselton expects year-over-year sales declines at GM, Ford and Chrysler in the range of 40 to 50 percent.
Japanese carmakers Toyota Motor Corp, Honda Motor Co and Nissan Motor Co could see sales declines in the 30 to 40 percent range, he added.
Hoselton said the tight credit markets for autos were still a major problem for car dealers.
“Although better than fourth quarter of 2008, it is still materially worse than a year ago,” he said.
The median forecast of 34 economists surveyed for Reuters is for an annualized sales rate of 9.4 million cars and light trucks for February, significantly lower than the 15.3 million rate in the same period last year.
On a unit basis, last month’s new vehicle sales are expected to be 685,000 units, a 41.4 percent decrease from 2008 but a 4.6 percent increase from January, according to Edmunds.com.
The depressed car sales, which account for 20 percent of all U.S. retail sales, add to concerns about the U.S. economy, which is not expected to improve any time soon.
“The fluctuation in car sales and the instability of the stock market are just two examples of the volatility in the marketplace, which is wreaking havoc on consumer confidence and hampering any economic recovery,” said Jesse Toprak, executive director of industry analysis for Edmunds.com.
Some automakers, such as Ford, and large dealer AutoNation Inc are forecasting a slight improvement in car sales in the second half of the year as the economic stimulus package from the Obama administration takes effect.
At the same time, some forecasting firms are cutting their overall sales view for the year, but say U.S. vehicle sales appear to be at or near bottom.
J.D. Power and Associates, an influential industry tracking service, now expects U.S. light vehicle sales to drop to a 27-year low of 10.4 million vehicles this year, compared with its earlier forecast of 11.4 million units.
“We believe we are nearing the bottom of this cycle,” said Jeff Schuster, executive director of global forecasting at J.D. Power. “Our expectation is for February or March to be the low point, but a high degree of uncertainty and risk remains for the second half of 2009.”
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