Jesse Toprak, executive director of industry analysis at the Santa Monica, Calif.-based Edmunds.com, says lack of availability of credit means dealers can't generate business or be flexible in lending to buyers. "What's true for housing is true for the car market; it has already affected dealers' access to credit lines to finance cars for inventory," he says. "It's coming from all angles. The danger in short term is that the weakest will be eliminated," he says.
He says consumers are also holding off. "The indirect impact is psychological, where consumers--even those with the ability to purchase--are postponing because the market is so mixed up. They don't want to spend what they don't have. Now we will see the ownership cycle getting longer."
The firm predicts that this month's new vehicle sales will sink to levels not seen since the early 1990s, with about 1.05 million units total for the month. If so, that would be nearly a 20% decrease from September 2007 and a 15.7% decrease from August. Toprak says February 1993 was the last time that less than one million new vehicles were sold in a month. "And we're coming remarkably close to that volume again," he says, adding that next month won't be any better. "October sales are even worse than they are in September, so we don't likely have much to look forward to next month."
Edmunds predicts that GM, Chrysler and Ford will hurt the most, and Toyota will see the worst sales drop among Japanese brands. The firm says that adjusted for fewer selling days this month versus the month last year, Chrysler sales will be off 33.8%--giving it U.S. market share of 9.7% for the month; Ford will be off 21.9% and GM will be down 20.7%, giving them 13.1% and 24.3% market share. Among imports, Honda will be down 2.2%, Nissan 7.8%, and Toyota will be off 14.1%.
Toprak says the Korean siblings Hyundai and Kia will be flat and down around 16%, respectively. He says imports are weathering the storm better because they have fewer trucks and SUVs, and because of image. "Most consumers think of Japanese brands when they think of product that is 'safe,' meaning decent gas mileage and high resale value--that these will be safe choices during economic uncertainly."
Tom Peyton, senior advertising manager at American Honda Motor, says Honda's results reflect a strategy focused on fuel efficiency. "We are very fortunate that we have stuck by our guns all along and tried to focus on fuel efficiency and value, and that's what's selling the market right now. And the fact that we were able to expand production of Fit and Civic helped."