U.S. Auto Sales Outlook Grim for October

(MoneyWatch)  It looks like the 2009 model year is off to a truly terrible start, with U.S. auto sales in October expected to be the lowest yet this year.

By one measure, if sales were to continue for a whole year at the estimated sales pace for October, it would be the worst 12-month total in more than 25 years.

"Industry sales of light vehicles have weakened significantly in the past few weeks, amid unprecedented conditions in the financial markets and as global macro conditions keep softening," said Brian Johnson, auto industry analyst for Barclays Capital, in an Oct. 29 note.

Automakers will report October U.S. auto sales on Monday, Nov. 3. Johnson said he's now expecting a Seasonally Adjusted Annual Rate of only 11.3 million units for the month, even lower than his estimate of around 12 million (above), earlier this month.

The SAAR is an estimate of how many cars and trucks the industry would sell in 12 months, at the sales rate for a given month, adjusted for seasonal ups and downs. To put that in context, sales of 11.3 million for a whole year would be the lowest sales since 1982.

That represents a horrendous unofficial start for the 2009 model year. The traditional model year starts in October. Increasingly, the automakers introduce new models almost year-round, but the fall still accounts for the lion's share of model-year changeovers.

Johnson said October sales were characterized by low consumer confidence, limited credit availability and low showroom traffic.

He predicted automakers may have to cut fourth-quarter productions schedules even more than they have already been cut, due to slow sales: "We believe that the large cuts telegraphed so far are far from enough to curb Ford's excess inventories, and could also prove insufficient for GM in light of the quickly deteriorating end-demand."