Few see brighter auto sales picture

November sales out Tuesday, as Big Three make new pitch to Congress

NEW YORK -- As the humbled captains of the U.S. auto industry spend the weekend preparing their second case for a federal bailout, their best argument may come in November's auto sales figures.

Industry watchers and car dealers say they expect November's vehicle sales to come out slightly better than October's historic lows, but increased incentives haven't been enough to overcome tight credit, the crumbling economy and weak consumer confidence that are keeping consumers away from showrooms.

"All those major factors that had an impact on new car demand so far this year are still with us," said Jesse Toprak, executive director of industry analysis for the automotive Web site Edmunds.com.

Edmunds is expecting sales to drop 28 percent from a year ago to 850,000 units when automakers announce their November sales Tuesday. Barclays auto analyst Brian Johnson predicts a 32 percent plunge. Other analysts are just as pessimistic and expect U.S. car companies to take the biggest hit.

If there's a bright side, it's that industry watchers are expecting a slight improvement over October's total of 838,156 vehicles. October's seasonally adjusted annual sales rate of 10.6 million vehicles was the worst in more than 25 years, according to Autodata Corp.

Analysts say a number of factors may have stabilized sales, the most obvious being the collapse in gasoline prices, which have shed 75 cents a gallon in the past month.

Automakers have ramped up sales incentives to near-record levels, as well. GM launched its annual year-end sale earlier than usual, knocking thousands of dollars off its vehicles. Toyota extended its zero-percent financing offer, while Nissan launched a similar deal. Ford began offering employee pricing.

Edmunds says average industrywide incentive spending rose 15 percent from a year ago to $2,625 per vehicle in November. Among the Detroit Three automakers, incentive spending has been even higher.

The companies' sales results will come the same day they must submit a detailed plan to Congress that spells out how they will remain viable if they get $25 billion in government loans to stave off bankruptcy.

Some lawmakers have suggested General Motors and Chrysler should use a Chapter 11 bankruptcy filing as the best way to cancel unfavorable contracts and restructure costs, but the companies say that's not a good option because consumers would be afraid to buy a car from a bankrupt company.

While the bailout drama may be a worrisome sideshow to consumers, it is unlikely it has had much impact on sales, Edmunds' Toprak said.

"It's still too early to say that October is the bottom and we may be recovering," he said, "but we have some indicators that that might be the case."