2008: A Year Not To Be Forgotten, as Much as We'd Like To
December 29, 2008

SANTA MONICA, California -- For the automotive industry, 2008 will be a year not to be forgotten, though those in the auto industry, indeed, would like to forget it and move on.

The overhwhelming theme of the year came near the end with the collapse of the financial industry, which, in turn, prompted car sales to plummet to levels not seen since the early 1990s, when the country's population was 50 million people fewer. That led Detroit automakers to head to Washington for financial help.

Though largely overshadowed by the credit crisis, the deteriorating economy and bailout mania, other trends emerged in 2008, as an analysis by Edmunds.com, parent of AutoObserver, shows:

Used Cars Fared Better Than New Cars: Used car sales were down only 8 percent compared to 2007, and Certified Pre-Owned (CPO) sales were flat. During the same period, new car sales fell by more than 16 percent.

"During the downturn in the economy, many car shoppers hunted for bargains in the used car lot," observed Edmunds.com Analyst Joe Spina.

Consumer Preferences Shifted With Gas Prices: Consumer preferences swayed with the constant fluctuation in gas prices.

"Over the course of the year, gas prices climbed from an average of less than $3 per gallon to well over $4 before falling back to under $2 per gallon," recalled Edmunds.com Senior Analyst Dr. David Tompkins. "Car buyers responded to these price swings by gravitating toward fuel-efficient vehicles when prices were high, and reconsidering bigger vehicles when gas prices fell again."

• Hybrid vehicle market share was 2.1 percent at the beginning of the year, peaked at 3.2 percent in April and fell to 2.2 percent in November.
• Compact car market share was 15.3 percent at the beginning of the year, reached 21.3 percent in June and declined to 16.1 percent in November.
• Large pickup truck market share was 12.3 percent at the beginning of the year, dipped to 9.3 percent in May and climbed back to 13.8 percent in November.
• Midsize SUV market share was 15.3 percent at the beginning of the year, dropped to 11.8 percent in May and rose to 13.7 percent in November.

Automakers Eliminated Models and Sold Brands To Reduce Expenses and Raise Capital: "The U.S. market has always been a competitive place, and now the economic crisis has made it uninhabitable for certain brands," said Edmunds.com Analyst Jessica Caldwell.

• Chrysler discontinued Aspen, Aspen Hybrid, Pacifica and Crossfire.
• Dodge stopped production of the Durango and Durango Hybrid.
• Ford sold Jaguar and Land Rover and divested a portion of its Mazda ownership, while General Motors sold its interest in Suzuki, put Hummer up for sale and put Saab and Saturn up for review.
• Isuzu will discontinue selling vehicles in the U.S. beginning January 31, 2009.
• Jeep has scheduled Commander production to end in mid-2009.

Increased Incentives Spending Did Not Boost Sales: 2008 was a good year for buying a car, at least in terms of affordability, with automakers rolling out rich incentives.

 "Some automakers hit new highs in terms of incentives spending this year, but it seems that they reached the point of diminishing returns," stated Edmunds.com Senior Analyst Jesse Toprak.

• In 2008, domestic automakers spent $3,545 per vehicle sold, up 10.3 percent from $3,212 in 2007. During the same period, market share fell by 3.6 percent.
• In 2008, Japanese automakers spent $1,397 per vehicle sold, up 16.4 percent from $1,200 in 2007. During the same period, market share rose by 2.9 percent.
• In 2008, Korean automakers spent $2,052 per vehicle sold, up 10.3 percent from $1,861 in 2007. During the same period, market share rose by 0.5 percent.
• In 2008, European automakers spent $2,794 per vehicle sold, flat compared to $2,802 in 2007. During the same period, market share rose by 0.5 percent.

 

* All data reflects activity between January 1 and November 30 of the indicated year

** Edmunds.com's monthly True Cost of Incentives SM (TCI SM) report takes into account all of the manufacturers' various United States incentives programs, including subvented interest rates and lease programs as well as cash rebates to consumers and dealers. To ensure the greatest possible accuracy, Edmunds.com bases its calculations on sales volume, including the mix of vehicle makes and models for each month, as well as on the proportion of vehicles for which each type of incentive was used.

Photos by manufacturers

1 - Buyers waited in line and paid premiums for the Toyota Prius last spring as gas prices soared. By year end, with gas prices plummeting, buyers had to be lured with incentives to buy the Prius, inventories of which were building.

2 - Among the models Chrysler eliminated from its line was the Chrysler Aspen, including the hybrid version, which was gone just after it arrived.

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