Auto Sales Forecast: GM Hopes for the Worst; Then Recovery

(MoneyWatch)  U.S. auto sales in February will likely mark six months in a row sales have fallen below 1 million units.

It was news when monthly U.S. auto sales fell below 1 million in September 2008. It was the first time that happened since February 1993, according to edmunds.com. Unfortunately, due to the credit crisis, a U.S. recession and low consumer confidence, it has become routine since then. U.S. auto sales fell to 656,976 in January 2009, according to AutoData Corp.

Automakers are scheduled to announce February sales tomorrow, March 3. The best that could be said for recent sales results is that some forecasters, including GM, expect that the first quarter of 2009 represents the bottom of the current cycle, and that the pace of sales will slowly start to recover. Others are worried that as bad as sales are, they could keep getting worse.

Opinions vary, but forecasts for U.S. auto sales in 2009 range from only 10.2 million to 12.2 million, said Craig Cather, president and CEO of CSM Worldwide. That's down from 13.2 million in 2008.

GM said in its latest "viability plan," submitted to the U.S. Treasury Department last month, that sales should hit bottom this quarter. However, GM said at the same time it will require a lot more government support, to avoid bankruptcy. Poor U.S. sales in February will also underline the urgency of the situation for Chrysler, too. GM and Chrysler continue to lobby for additional U.S. government loans.

Brian Johnson, auto industry analyst for Barclays Capital, said he expects February sales at a seasonally adjusted annual rate of only about 8.9mm units. That's even worse than January, at a 9.6 million SAAR, or the fourth-quarter 2008 average of 10.3 million units. Those looking for a cyclical bottom in the first quarter are "unlikely, in our view, to take any comfort in February sales," Johnson said in a note to shareholders.

Separately, edmunds.com said that based on online auto shopping on its web site, it expects February sales of about 685,000 units, down 41 percent from February 2008. That would be a February SAAR of about 9.3 million. "The SAAR stabilized during the last four months, but now we anticipate another decline in February," said Jesse Toprak, executive director of industry analysis.

Chart: CSM Worldwide