For automakers, road continues to be rough

DETROIT - Industry analysts are predicting a lackluster end to an already dismal year for automakers, likely the worst in nearly a decade.

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 since 1998.

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

"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 is even more concerned about sales now than he was a year ago, because 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 its longtime position as the No. 2 automaker by U.S. sales. Toyota Motor Corp. is on track to overtake Ford this year.

Robert Barry, an auto analyst with Goldman Sachs Group Inc., 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 2008.

Nesvold predicts Ford's sales could fall as much as 12 percent this month from December 2006, pointing out that the automaker's new 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.

General Motors Corp. could see an even sharper decline of 14 percent due to a planned cutback in sales to rental fleets, Barry said.

Barry said Chrysler LLC likely will post double-digit drops this month from December 2006, which was a strong month thanks to brisk sales of the Chrysler Sebring and 300 sedans.

Japanese automakers also are expected to see lower sales for the month, particularly as the housing crunch continues to dampen demand in California, their key market.