A combination of economic woes, led by a nation-wide housing slump, contributed to a drop of nearly 80,000 car and truck sales in February. Despite having 25 selling days, one more than February 2007, the monthly total came in 6.3 percent lower than the same month last year. Automaker sales figures reached 1,176,236 units, a slight improvement over January’s numbers.
Detroit Hit Hardest
While no automaker is thriving in what has so far been a dismal 2008, domestic automakers are taking the brunt of the damage. Unadjusted for the extra sales day, Ford, GM, and Chrysler fell 4.8 percent, 19 percent, and 9.5 percent, respectively. "February was a very disappointing month for industry sales," GM Vice Chairman Bob Lutz told Reuters. "We still expect the economy to recover in the second half. Our crystal ball is not that much better than anybody else’s"
International carmakers were not left unscathed. Toyota took a rare hit, reporting a sales drop of 2.4 percent from February 2007. However, Toyota did achieve best-ever February sales for the Toyota Camry. BMW and Hyundai reported drops of 10.5 percent and 13.5 percent, respectively. Fortunately, not all the news was doom and gloom. Honda posted a 1.9 percent gain for the month, improving sales to 102,313 vehicles. Nissan said sales increased 0.8 percent to 76,151 vehicles. Also reporting was Volkswagen brand, with sales up 1.2 percent over the year-ago month.
In total, European nameplate sales were down 0.2 percent, Asian nameplates were down 0.5 percent, and domestic nameplates were down 11.2 percent.
Small Cars in Demand
As gas prices continue to rise, Americans are beginning to embrace the small, economical car. This month saw "lower small" sales – think the Kia Rio and Toyota Yaris – enjoying a 33.6 percent sales jump from February 2007. When separated out, international makes of "lower small" cars rose 50.8 percent. Small, novelty cars, like the Toyota Scion and Mini Cooper, also did well. That segment, entirely international in its composition, rose 9.9 percent from the previous year.
It’s the Economy, Stupid
In all, lackluster February auto sales, hot on the heels of even worst January sales, provide plenty of ammunition for those who believe the U.S. is slipping into a recession. The housing collapse continues to reverberate through the national and world economy, and there’s no rebound in sight. Markets where home prices have been hit hardest, like California and Florida, are also seeing the biggest drop in auto sales. Toyota President Katsuaki Watanabe, speaking to reporters at the Geneva auto show, said the automaker still expected a second-half recovery, although credit conditions have tightened margins.
Incentives on the Rise
In the face of anemic sales, industry experts expect to see more incentives on dealer lots. In February, incentives were up 8.4 percent compared with a year ago. "A lot of the automakers said they were trying to decline incentive spending, but what we’re seeing is them slowly creeping back up," Jessica Caldwell, an analyst at Edmunds.com, told USA Today. "For a lot of brands, because it’s going to be a really tough year, if January and February are any indications, (incentives) are probably going to keep increasing."
Toyota has historically spent less on incentives than its competitors, but in this year of tight margins, even the lean mean Toyota team is offering consumers more on the lot. Toyota’s average incentive was $1,015 in February, up from $717 a year ago. Chrysler was highest, at $3,579, up from an estimated $3,498 a year ago.
See below for a complete breakdown of February 2008 monthly and calendar-year-to-date sales by international nameplate.