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October was an ugly month, a very ugly month. Car sales dropped 32% as consumer confidence hit an all-time low (at least, for as long as someone has kept track) and banks were tighter than two coats of paint with lending. General Motors had it the worst with sales falling 45%. Even Toyota and Honda sales fell at least 23%.
It was so bad that normally-optimistic executives whipped out the superlatives to describe how weak sales were. GM called it the worst month since World War II. Mike DiGiovanni, GM’s chief market analyst, called it “a dire era.” He said these paltry sales raltes are “unsustainable” for any carmaker. Mark LaNeve, the vice president of North American sales and marketing, says sales were slammed and said consumers are “shell shocked.” DiGiovanni even followed up by saying that the government and banks need to break a credit deadlock and help finance car buyers to get sales moving again.
They aren’t exaggerating, either. It’s hard to tell who is tighter, consumers or banks. Probably consumers, since low showroom traffic is more to blame. But a selling rate of 10.7 million vehicles in a market that, until this year, had rarely been below 15 million vehicles is dismal. The carmakers won’t be able to react fast enough with cost cuts. Oh, and Toyota? The company that likes to say it would hate to see Detroit fail? It capitalized on Detroit’s credit problems with 0% financing deals. The company sales were down but market share in teh U.S. shot up from 16.8% to 18.1%. That’s not far from GM’s 19.9% for the month.
Privately, GM executives say the Bush Administration isn’t stepping up to help. Talks are ongoing and fluid, but GM, Ford and Chrysler are going to need some cash to get through this. If they make it, there will be consumers coming out to buy cars. Pent up demand will be released. But Detroit will need a hand up to survive this one.