Ford, Toyota note positive 'blip' in January sales

DETROIT — Sales of new cars and trucks in early January indicate that industry conditions might be improving slightly, executives from both Ford Motor Co. and Toyota Motor Corp. said Monday during the Detroit auto show.

Describing the increase as a positive "blip," Ford marketing chief Jim Farley said he was hesitant to call it a trend.

U.S. auto sales plummeted 18 percent last year from 2007, and industry forecasters believe this year will be worse as the U.S. economy struggles with recession that has frozen the credit markets and caused the value of consumers' homes to plummet.

"It's very, very surprising. I have no idea why it's happening," Farley said, speculating that the increase could be caused by automakers extending December incentives or, perhaps, by a boost in consumer confidence.

"Across all manufacturers, across all segments, we are seeing a surprising trend rate on sales, beyond our expectations," Farley said.

Conversely, the nation's largest seller of Detroit's new cars and trucks, AutoNation Inc., on Monday said it has ordered 60 percent fewer vehicles during the next three months than it did a year ago, citing the ongoing credit crisis, a sour economy and swelling inventories.

That could foreshadow even deeper cuts in the production of new vehicles if consumers don't start buying more soon. Production cuts could, in turn, further squeeze parts suppliers, many of whom are already teetering on the brink of bankruptcy.

"We have three to four months of inventory to work through," AutoNation CEO Mike Jackson, in Detroit for the 2009 North American International Auto Show, told the Detroit Free Press.

Jackson said he was excited to sell some of the new cars and trucks on display at the show, especially electric models and the new Ford Taurus, which he said was stylish while predicting that it would sell well.

However, Jackson said it would take some time for the credit market to normalize, which would allow consumers with average or better credit to secure auto loans again. That means it will be awhile before dealers work through existing inventory and begin buying vehicles from the automakers again.

Every manufacturer, Jackson said, has seen cars and trucks build up on dealer lots as sales plummeted 18 percent in 2008, including a dive of 36 percent in December compared to the same period a year before.

Industry analysts consider around 60 to 65 days a healthy level of inventory. But according to Automotive News, inventory levels are fairly bloated. General Motors Corp. has 136 days worth of cars and trucks on dealer lots, while Chrysler LLC has 117 days and Ford has 101. Toyota, meanwhile, is at 90.

Ford CEO Alan Mulally expressed a similar concern about growing inventory levels during a dinner with journalists Sunday night. Ford has been making progress in its turnaround and working to manage its own inventory, but the growing industry levels have Ford worried.

"We are concerned that some of our competitors have too much inventory," Mulally said.