Autos Likely to See Weak December

Holiday discounts failed to bring consumers out of their funk, and December sales are expected to fall around 4 percent, which would bring the full-year total for U.S. auto sales to 16.1 million vehicles, the lowest volume since 1998.

Sales have been hurt by consumer anxiety over gas prices, the housing crunch and the overall weakening economy.

Industry watchers warn that the 2008 auto sales performance could be even weaker.

"Given the current economic challenges and the uncertainty associated with the upcoming presidential election, we do not anticipate that 2008 will be any more robust for the car business," said Jesse Toprak, chief economist for the auto information site Edmunds.com. Toprak said there is little promise for a turnaround until 2009.

Bear Stearns analyst Peter Nesvold said in a recent note to investors that he's even more concerned about 2008 sales than he was a year ago, since consumer sentiment and employment levels are continuing to deteriorate. Nesvold said the country hasn't seen a meaningful downturn in auto sales in 15 years and is long overdue for one.

"In a nutshell, if consumers don't feel good about the world or employment is slipping, they tend to delay major expenditures such as a new house or car, if possible," he said.

December is Ford Motor Co.'s last chance to hold on to its longtime position as the No. 2 automaker by U.S. sales. Toyota Motor Corp., which outsold Ford by 15,000 vehicles in November, is on track to overtake Ford this year.

Robert Barry, an auto analyst with Goldman Sachs, predicts Ford's sales will fall 3 percent in December compared with a relatively weak December 2006. Barry said Ford is struggling because it's at a low point in its product cycle, with a major redesign of the F-150 pickup and a new crossover not due out until next year. In the meantime, it's being hurt by aggressive incentive spending by Toyota and other rivals.

Nesvold predicts Ford's sales could fall as much as 12 percent in December, pointing out that the automaker's newly rebadged Ford Taurus and Mercury Sable sedans and Taurus X crossover have seen disappointing results all fall. But Nesvold said the Ford Edge crossover and Ford's smaller sport utility vehicles have held up well.