Auto sales plunge after federal rebate ends

By Alex Gary

BusinessRockford.com

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ROCKFORD — A month after the federal “cash for clunkers” program ended, the three vehicles assembled at Chrysler Group LLC’s Belvidere assembly plant had their worst month of U.S. sales in the Dodge Caliber era.

In September, with depleted inventories, dealers sold just 2,312 Calibers, Jeep Compasses and Jeep Patriots, down nearly 80 percent from September 2008.

The Caliber and Patriot were two of the 10 top-selling vehicles in the federal program, which ended Aug. 24 and gave buyers rebates of up to $4,500 if they traded in a low-mileage vehicle for a more fuel-efficient one.

The September slump for car and truck makers follows a heady summer. Automakers got a big lift in July and August from the clunkers program, which spurred sales of nearly 700,000 new vehicles nationwide. The big discounts lured in many customers who otherwise would have waited until later in the year.

Now automakers are starting to feel the effect. GM’s sales plunged 45 percent to 155,679 vehicles in September, compared with a year earlier. Japan’s Toyota Motor Corp. said sales fell 13 percent while Nissan Motor Co. said its sales fell 7 percent. Honda’s sales fell 23.3 percent to 77,229. Ford Motor Co. had the smallest decline among major manufacturers, falling 5.1 percent to 114,241, but the decline followed two straight months of rising sales.

Hyundai was the sole winner among big carmakers, reporting a 27 percent rise in sales from a year earlier.

Chrysler Group’s sales as a whole fell 42 percent.

“Low inventories of popular models at the start of the month hampered Chrysler, Jeep and Dodge sales. However, the company responded with increased production,” said Peter Fong, president and CEO of Chrysler brand for Fiat SpA.

Chrysler was going to bring back a second shift in Belvidere in October on a temporary basis, but the company postponed the start to mid-November because of supplier problems.

Erich Merkle of Autoconomy.com said Chrysler likely will be looking closely at October’s sales before starting another shift, which the company said was necessary to pump out an additional 10,000 Dodge Calibers by the end of the year.

“You really don’t want to bloat those inventories again,” Merkle said. “It’s hard to judge the real demand for the Belvidere vehicles because of the volatility (of sales). Certainly, sales will come up, but it’s really hard to plan production.”

Max Gates, a Chrysler spokesman, said the company is “constantly monitoring the market, but there are no announced plans to change the schedule at Belvidere.”

The Associated Press contributed to this report. Reach Assistant Business Editor Alex Gary at agary@rrstar.com or 815-987-1339.

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