Auto makers are watching sales slide

By Tom Stundza -- Purchasing, 4/2/2008 9:34:00 AM

The U.S. auto market continued to slump in March, with light-vehicle sales falling 19% at General Motors, 10% at Toyota and 14% at Ford. The month had two fewer selling days than in March 2007, which magnified the declines. But analysts tell The Wall Street Journal they were expecting weak monthly results in what is shaping up to be one of the toughest years for U.S. auto sellers in at least a decade. Some economists tell Purchasing.com that the consensus forecast of a 15.5 million sales year may be too optimistic.

Sales last year were 16.1 million units. But the continuing downturn in the economy is dampening demand in general, while high gasoline prices continue to cut deeply into sales of traditional SUVs and pickups. “This is a very challenging external environment, reflecting a seismic shift in consumer preferences,” says Ford marketing executive Jim Farley. “These conditions will likely persist in the near future.”

Also, the fact that Toyota has seen sales decline for the seventh of the past nine months is signal of the malaise now afflicting automakers in the U.S.— as the troubles on Wall Street and in the housing market take a rising toll on the economy. The WSJ says that when people see the value of their homes decline -- and real-estate executives say home-price falls around the country are the worst since the 1930s -- expensive purchases such as a car are often the first to get postponed.