Sept. US auto sales fall amid clunkers letdown

DETROIT - U.S. auto sales fell sharply in September, enduring a tough hangover from this summer's Cash for Clunkers buying spree.

General Motors Co. and Chrysler Group LLC posted the biggest slowdowns during the month, while Hyundai was the sole winner among big carmakers, reporting a 27 percent rise in sales from a year earlier.

"It was a more difficult month than we anticipated," Mark LaNeve, GM's vice president of U.S. sales, told reporters during a conference call."

The September slump for car and truck makers follows a heady summer. Automakers got a big lift in July and August from clunkers, which spurred sales of nearly 700,000 new vehicles. The government program's big discounts lured in many customers who otherwise would have waited until later in the year to walk into dealerships.

Now automakers are starting to feel the effect. GM's sales plunged 45 percent to 155,679 vehicles in September, compared with a year earlier. Chrysler sold only 62,197 vehicles last month, down 42 percent.

Even higher incentives didn't shake buyers from their fall slumber. Automakers spent an average of $2,557 per vehicle in the U.S., up $83 from August, according to the auto Web site Edmunds.com. But that was due largely to big increases from domestic automakers.

"After five straight months of decline, incentives are on the rise again," Edmunds analyst Jessica Caldwell said in a statement. "Now that Cash for Clunkers is over, automakers have to give consumers an incentive to buy -- out of their own pockets, not the taxpayers'."

European and Japanese manufacturers cut their spending on incentives, which include offerings like financing deals and rebates that induce consumers to buy.

Japan's Toyota Motor Corp. said sales fell 13 percent while Nissan Motor Co. said its sales fell 7 percent. Honda's sales fell 23.3 percent to 77,229.

Ford Motor Co. had the smallest decline among major manufacturers, falling 5.1 percent to 114,241, but the decline followed two straight months of rising sales.

Ford's sales fell 37.2 percent from August. Two of Ford's vehicles -- the Focus and Escape -- were top sellers in the clunkers program. But now, with clunkers done, sales of the those vehicles posted steep declines. The fuel-efficent Focus fell 64.1 percent between August and September. The Escape crossover declined 58.5 percent.

GM blamed its sales decline on the clunkers program pulling buyers into July and August, weak consumer confidence and low inventory levels during September before production increases could replenish stocks.

"As expected, the market returned to pre-Cash for Clunkers levels in September," said GM's LaNeve. "Fortunately the fourth quarter looks brighter."

GM's weak sales report is the second straight day of gloomy news for the automaker. On Wednesday, the company said the deal to sell its Saturn brand to race-car magnate Roger Penske fell through, spelling the end of the car unit. Last month, Saturn's sales plunged nearly 84 percent.

Ford's top analyst told reporters on Thursday he does not think the Cash for Clunkers hangover will affect sales in October and beyond.

"I think most part the payback for the program will be minimal in the coming months," George Pipas said. "I don't think we should be using any excuses. I think from now on the economy stands on its own."

Cash for Clunkers and summertime production cuts kept inventories of popular models low during the month, but even so, Chrysler predicted its market share will rise 0.8 percentage points from August levels. The company increased factory output to replenish supplies.

"While we had some bright spots in September, it was still a challenging sales environment for the industry," Peter Fong, CEO of the Chrysler brand, said in a statement.

October, however, is traditionally a slow month for sales. On top of that, shoppers are guarding their wallets, worried about holding onto their jobs. Now the question is whether dealers can really lure them back and help the industry recover for the remainder of the year.

South Korean automaker Hyundai's sales jumped on easy comparisons with a weak year-ago period and strong demand for its Elantra and Santa Fe models.

Automakers sold a combined 1.3 million vehicles in August for a seasonally adjusted sales rate, or SAAR, of 14.1 million. Many analysts expect a SAAR of 9.3 million for September.