Holiday Depression: November Auto Sales Remain Low

(MoneyWatch)  The downturn in U.S. auto sales has evolved to the point where many consumers are simply sitting on their wallets.

At first, gas prices were the big problem. Consumption fell slightly, and gas prices have fallen a lot. Yet overall, people still aren't buying cars.

Scarce credit was, and to a great extent still is, the big problem. Even the most credit-worthy customers are finding it somewhat harder to get financed. Customers with bad credit can't get financed, period.

Yet sales are down for Nissan, Honda and Toyota, too, even though their credit arms are in good shape. Ford Credit has not cut back, either, as drastically as the captive finance companies for GM and Chrysler. So credit is a big problem, especially for GM and Chrysler, but it isn't the entire problem.

Brian Johnson, auto industry analyst for Barclays Capital, said in a recent note that consumers just aren't buying.

"The story of the industry seems to have shifted a little bit from potential buyers being unable to close the deal due to the credit tightening, towards a widespread reluctance to purchase durable goods at this point, amid continued very weak consumer confidence," he said.

Despite a number of positive factors ?€" big year-end discounts, lower gas prices, and a modest uptick in consumer confidence from extremely low levels ?€" November sales are expected to continue at a depressed level.

Automakers are expected to announce November sales on Tuesday, Dec. 2. Barclays expects a seasonally adjusted annual sales rate of only about 11 million. Edmunds.com expects a November SAAR of about 11.5 million.

That would be a modest improvement versus October, which had a SAAR of about 10.6 million, according to AutoData Corp. The SAAR is an estimate of how many cars and light trucks the industry would sell in a year, corresponding to the sales rate for a given month. Based on sales history, the SAAR takes seasonal variations into account; it's not simply one month times 12.

"Sales improved slightly over October thanks to near record high incentives and perhaps a sense of relief that the presidential election is over," said Jesse Toprak, executive director of industry analysis for edmunds.com. Even so, edmunds.com expects November sales to be about 28 percent below the year-ago month.