Car markets in the U.S.: the end of decline?

As auto sales in the U.S. showed a smaller than expected decrease of 37% in March industry executives were encouraged to hope that car market is nearing a bottom. The largest drop in the sector was reported by General Motors who posted a 45% decline. It was 17th consecutive month for the industry wide sales decrease, still March showed a slight increase as compared with February which is attributed to record discounts and higher sales to fleet operators such as government agencies.

Industry executives expressed their hope that the market will hit bottom over the next quarter or so. Mike DiGiovanni, Mike DiGiovanni, noted that these may be ‘the first sings of a brightening in the outlook for the auto industry’. Efraim Levy, an equity analyst with Standard & Poor's, said: "We believe we may be at or near the trough of the industry's year-to-year comparisons but do not see an uptick in industry demand before (the fourth quarter) at the earliest”.

Ford Motor Co, the only U.S. automaker operating without government aid, recorded a 41% drop in sales. Leading Japanese automakers along with Chrysler LLC posted sales declines ranging between 36 and 39%.

In total about 9.9 million vehicles were sold down sharply from the average near 16 million over the past decade.

Meantime, sings of recovery started appearing at the car markets across Europe helped in part by government tax incentives encouraging cash-strapped consumers to ditch old cars for new and more fuel-efficient models. Strong sales increase was recorded in France and Italy with Spain reporting that the rate of decline slowed.

German officials said that over 860,000 car owners applied for a new-for-old "scrappage" bonus.

Having considered the success of this program, U.S. lawmakers will be discussing a similar bill that won support on the part of Barack Obama.