The increasing inability of car buyers to find financing for new automobiles is adding to concerns hanging over a U.S. auto industry that has been blistered by high gasoline prices and a weak economy in 2008.
Auto makers will report September sales on Wednesday, and the pace of new-vehicle deliveries is expected to remain at a 15-year low. Research firm J.D. Power & Associates estimates that the seasonally adjusted rate of annual light-vehicle sales will dip to 12.6 million vehicles, compared with 16.2 million a year ago.
If the estimate holds, it would represent a decline of 26% compared with the same month in 2007. Such an outcome would shatter any notion that the auto industry has hit bottom following a dismal summer selling season, and turn up the spotlight on the cash concerns facing Detroit's Big Three.
The sluggishness has been largely pinned to an unwillingness of buyers to enter the new-car market at a time when gasoline prices are escalating and the economy is shaky. In recent months, however, domestic auto makers have mostly abandoned vehicle leasing, and lenders -- many of which are mired in red ink -- have significantly tightened terms.
"Decreased credit availability is constraining sales even at prime levels of credit quality," Goldman Sachs auto analyst Patrick Archambault said in a note to investors. This means that buyers are not only unwilling to buy, but they also are increasingly unable to buy.
By: John D. Stoll
The Wall Street Journal; September 30, 2008
