Consumers continue to save, auto sales plummet

03.05.09
By Lewis Green

Given ongoing financial uncertainty, consumers are largely remaining in saving mode - forgoing large purchases until job prospects return and credit card debt is paid off.

Despite a slight increase in consumer spending during January, many Americans are saving their pennies and in turn automakers are feeling the pinch.

New February data shows steep declines in auto sales for the month.

According to a summary of automakers' results from Autodata, the big three in the U.S. suffered big setbacks - selling just about half as many vehicles in February compared to one year earlier.

The report says General Motors February sales fell 53.1 percent, Ford Motor Company slid 48.5 percent and Chyrsler tumbled 44 percent.

Overall Asian automakers' sales fell nearly 34 percent, the Autodata figures reveal.

Fox Business Network reports Intellichoice editor James Bell as saying, "It's a mental thing -there's a sense that throwing money into a vehicle is too large of a purchase for a lot of people and so they're keeping their car longer than they probably normally would have."

Bell also told the news source that for demand to return to the auto industry American consumers will need to change their mindset first and buying behavior will follow.

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People are saving instead of spending