US car sales lowest in 10 years

US sales of new cars and light trucks plunged to their lowest level in more than a decade in June, as high gas prices and a weak economy kept American consumers away from dealer showrooms.

Chrysler sales fell 36 percent in June, and pickup trucks like these Rams at a dealership in a Littleton, Colo., went unsold.
With the drop last month of more than 18 percent, automakers now expect to sell well below 15 million new vehicles this year, far fewer than the norm this decade of more than 16 million vehicles a year.

Detroit automakers were hit hard. Ford Motor was down 28 percent in June, General Motors was off 18 percent, and Chrysler dropped 36 percent.

Despite its sharp decline, G.M’s results were better than expected, which industry analysts attributed to a sales blitz with offers of zero-interest, long-term financing deals. The cut-rate loans helped G.M. retain its historic position as the top-selling United States automaker over Toyota, whose sales fell 21 percent.

While sales had been steadily declining since the spring, the June totals, announced Tuesday, marked a low point in what is shaping up as an abysmal year in the car business. The sales last month were further depressed because there were three fewer days when dealerships were open compared with a year ago.

“We’re looking at an industry sales rate that is the lowest in over a decade, probably in 15 years,” said George Pipas, Ford’s chief market analyst.

Prospects for a turnaround through the rest of the summer are dimming for reasons beyond the soft economy and $4-a-gallon gas.

Even with some factories running at peak capacity, auto companies cannot meet the surging demand for small, fuel-efficient cars. At the same time, manufacturers are slashing production of slow-selling pickup trucks and sport utility vehicles.

“We’re talking a few months at least before automakers can better match supply with demand,” said Jesse Toprak, executive director of industry analysis for Edmunds.com, an automotive research Web site.

The drastically lower sales have raised concerns about the financial health of the Detroit automakers, which have relied heavily on sales of pickup and sport utility vehicles for profits in recent years.

Shares in G.M. sank to their lowest level in more than 50 years last week, though they rebounded 2 percent Tuesday. Many investors are questioning whether the poor sales will force a cash crisis at the company.

Officials at G.M., Ford and Chrysler have vigorously denied that they will run out of operating cash in the near future.

“Even in a worst-case scenario, we have enough cash and credit lines to last well through the end of 2009,” said a G.M. spokesman, Tony Cervone.