Analysts: Auto Sales Decline Likely In February

Forecasts by two analysts indicate that February sales would be worse or the same as a poor January.

DETROIT (AP) -- Shares of the five major automakers fell Monday after analysts issued forecasts for continued dismal sales in February and beyond.

General Motors Corp. sank 21 cents, or 9.3 percent to $2.05 while Ford shares dropped 13 cents, or 6.5 percent, to $1.87. U.S. shares of Nissan Motor Co. dropped 19 cents, or 3.1 percent, to $5.87, while Toyota Motor Corp. shares declined $2.07, or 3.3 percent, to $61.65. Honda Motor Co. shares declined 69 cents, or 2.9 percent, to $22.94.

The drops followed forecasts by three analysts showing that February sales would be worse or the same as a poor January.

KeyBanc Capital Markets Analyst Brett Hoselton said polls of dealers, lenders and trade associations show that showroom traffic across the U.S. was about the same last month as it was January.

He also wrote in a note to investors that auto financing remained a problem last month, according to his survey.

Hoselton said the survey results suggest that light vehicle sales dropped to a seasonally adjusted annual rate of 9 million to 9.5 million in February. Automakers release their sales results on Tuesday.

In January, the annualized rate for the month was 9.6 million, the lowest since 1982.

Automakers expected poor sales in February based on low consumer confidence, tight credit and fears of job losses. Several expect a small sales increase in the second half of the year.

The annual sales figure, known as SAAR, indicates what sales would be for the full year if they remained at that month's pace, with adjustments for seasonal fluctuations.

Barclay's Capital analyst Brian Johnson said in a note to investors Monday that the February SAAR may fall below 9 million vehicles.

In addition, CIBC World Markets Chief Economist Jeff Rubin predicted in a report that American consumers would buy only 8 million to 9 million vehicles per year during the next five years, roughly half the sales of the past five years.

CIBC issued a report saying the low demand will cause roughly half the 51 light vehicle plants in the U.S. to close permanently in the coming years, causing the loss of 200,000 auto-related jobs on top of the 560,000 lost already this decade.

"Detroit's biggest problem isn't that it's producing the wrong type of vehicles, but rather that it's producing too many vehicles -- far too many," Rubin wrote.

The 16 million vehicle bubble of past years was created by cheap credit and cheap oil "neither of which are likely to figure in the future," he wrote.

Hoselton said among the six largest automakers, GM, Ford, and Chrysler LLC are likely to see 40 percent to 50 percent sales drops compared with February of 2008. Toyota, Honda and Nissan should see drops in the 30 percent to 40 percent range, he said Monday in a note to investors.

Dealers reported that GMAC Financial Services, GM's finance arm, is getting more aggressive in making auto loans, but generally banks, credit unions and the automakers' finance arms aren't buying deals from people with lower credit scores. They also won't loan as much as they did in the past on comparable vehicles, Hoselton reported.

"The result is that either the customer puts more money down, the dealer cut its profit, or the deal simply does not get financed," Hoselton wrote.

Johnson wrote that the government's Term Asset Backed Securities Loan Facility could spur on some new asset-backed securities, which could ease pressure on auto financing and spur sales.

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