USA government to offer owners incentive on clunkers
New-car sales in March will likely fall to the slowest annual pace in at least 39 years when they are announced Wednesday, analysts predict, but the market could be at or near the bottom if the stock market sustains its recent rebound.
"Unfortunately we are expecting about a 43% decline industrywide from March 2008," said Jesse Toprak, an analyst with Edmunds.com in Santa Monica, Calif. That translates to an annual selling rate of 8.9 million cars and trucks, down from a 9.1-million rate in February.
Earlier this month, CSM Worldwide cut its forecast for 2009 U.S. auto sales from 10.7 million to 9.7 million, based on the assumption that unemployment will peak later this year at 9.4%. U.S. consumers have not purchased fewer than 10 million vehicles in any calendar year since 1970, according to Autodata Corp.
The pain continues to be spread evenly. Toprak expects General Motors, Ford and Chrysler to report sales declines of between 46% and 49% from March 2008. Edmunds.com predicts sales at Honda, Nissan and Toyota fell 43%, 43% and 40%, respectively.
"On a relative basis there have been some improvement in key indicators, but it's tough to call the bottom in the new-vehicle market," Toprak said. "It is unlikely to get much worse."
There has been encouraging economic news in the last two weeks. Housing starts rose 22% from January to February.
Factory orders for durable goods such as home appliances increased 3.4% in February.
Barclays Capital analyst Brian Johnson said a proposed "cash for clunkers" bill in Congress could boost sales "by as much as 2.5 million units if 2% of eligible vehicle owners participated."
The bill would offer $3,000 to $7,500 to owners of vehicles that are at least 8 years old to buy more fuel-efficient models. The money increases proportionately with the fuel economy of the new vehicle. Detroit Free Press