Rough Sailing Ahead as Automakers Battle Economic Headwinds

Rough Sailing Ahead as Automakers Battle Economic Headwinds

With three-quarters of the year over, 2007 has proven to be far more difficult for automakers to sell cars than they had anticipated at the start of the year.

Worse, the rest of the year looks like more rough sailing.

Analysts and auto execs, commenting on August sales Tuesday, used the word “headwinds” frequently the headwinds of the housing market, the credit crunch and higher fuel prices, all of which lead to slumping consumer confidence.

September sales may improve, but don’t get your hopes up, warns Jesse Toprak, Edmunds.com’s executive director of industry analysis. Those market forces will still be with us through year-end.

“We could see some recovery in September because consumers postponed purchases during June and July, and most automakers plan increased incentive spending in September because there’s still a lot of unsold inventory,” said Toprak. “So September may surprise us.”

However, Toprak noted October and, more particularly, November are historically the lowest sales volume months of the year with December typically showing some recovery due to year-end clearances and higher sales of SUVs and trucks in Snowbelt states.

“But we’re not going to see big growth in sales,” Toprak warned. “The depressed macroeconomics will still be with us.”

August Sales: Mixed Bag

On Tuesday, automakers reported sales of 1,478,211 light vehicles in the U.S. for an annual selling rate of 16.27 million vehicles. That’s slightly higher than a year ago but this summer, sales slowed to their worst annual rate in a decade.

As a result, some automakers have lower than total sales forecasts for the year. Some have also cut production schedules through the end of the year so slow sales don’t result in a buildup of unsold inventory.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.