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Last month, total sales of cars and trucks fell to 838,592 units, a 32 percent decline from October 2007. With sales hitting levels not seen since the early-1980s recession, the industry is in serious trouble. All three domestic automakers now face potential cash crises in 2009, and even traditionally strong players like Toyota and BMW are reporting staggering drops in sales and profits. Despite the challenging sales environment, hybrid sales were up slightly from September.
In September, auto sales continued their grim downward trend. Overall, the car market shrank by 27 percent relative to last year. Hybrids fared better, falling just 9 percent from September 2007 levels, but the message was clear—tight credit, reluctant consumers, and an economy plunging into recession have begun to affect all types of vehicles, hybrids included. Our earlier question if hybrids are “recession proof” is now answered.
The auto market’s gloom continued last month, although August brought slightly higher overall sales than July. In total, 1.25 million cars and trucks left dealerships in August, a 10 percent increase over the previous month but down 15 percent from August 2007.
In July, US auto sales fell to 1,136,539 units—13 percent below July 2007. Although hybrids fared better than most vehicles, their performance wasn’t stellar. The underlying issue is that hybrids are not big money-makers for most automakers, so there’s little incentive to ramp up production substantially.
As gasoline prices climbed and economic conditions worsened, those in the market for new vehicles were thinking about fuel efficiency. This should have fueled hybrid sales growth, but instead every hybrid model saw sales declines, due largely to an ill-timed drop in the supply of hybrids.
May hybrid sales were a mystery. Gas prices soared, so you would expect the most fuel-efficient vehicles to be selling at record numbers. Instead, May 2008 hybrid sales fell by nearly 25 percent compared to last year. Didn’t Toyota and the other hybrid makers see that oil broke past $100 per barrel on the first business day of the year?
The overall vehicle market went from bad to worse in April. It marked the worst April for car sales since 1995. Yet, brisk hybrid sales showed once again that fuel-efficient gas-electric vehicles are recession-proof. Hybrid sales climbed above 3 percent of the total market for second time ever—the last time was May 2007, also a month when gas prices spiked.
Hybrid sales in March 2008 continued to defy gravity. In an overall vehicle market that shrunk by more than 12 percent compared to a year ago, sales of hybrids grew by more than 10 percent. The gains were not evenly spread. Ford—having abandoned Bill Ford's goal of producing hundreds of thousands of hybrids per year—suffered from not having enough hybrids to meet demand.
Now that Eliot Spitzer is back on the job market, he might consider a new stint as hybrid promotion spokesman. The story of Spitzer cleaning up corruption on Wall Street only to fall prey to his own character weaknesses resembles developments in the hybrid market, which remains flat based on the auto industry's failure to deliver more hybrids just when car buyers are most ready to go green.
