Consumer

Auto Sales Decline Due To Credit Crisis

CHICAGO (CBS) ― With the economy in the tank, everybody is looking for a deal. But can you find one if you need a new car? CBS 2's Derrick Blakley reports that Wall Street's woes may seem far away, but at car dealerships, the credit crisis is hitting home - squeezing the life out of auto sales.

"Our business is down 25 to 30 percent over a year ago," said Desmond Roberts, Advantage Chevrolet.

Chevy dealer Desmond Roberts has plenty of company. September sales numbers were downright scary. Nissan is down 36 percent, Ford 34 percent, Toyota and Chrysler 32 percent and Honda 24 percent.

Economic fear has scared off most buyers - except those who absolutely have no choice, like Rory Weiss.

"Unfortunately, my car broke down and we have to get a new car," Weiss said.

Buyers who could have easily obtained financing just a few months ago are now routinely rejected as banks raise lending standards higher and higher.

Nissan dealer Michael Berman was shocked when a 25-year-old woman with good credit, putting 50 percent down, was rejected for a loan.

"This was a great customer with great down payment and a great equity position," said Michael Berman, Star Nissan. "It's almost not imaginable, but they're very tight."

The credit squeeze is hitting dealers as well, who borrow money to get the cars they sell. As many as 600 may shut down or consolidate this year as higher borrowing costs cut into profits.

"If we don't have financing to buy inventory, the consumer doesn't have anything to buy," Roberts said. "And if the banks aren't going to loan money to anybody, the consumers, who rely heavily on credit, aren't going to be able to buy as well."

That's why dealers say, the Wall Street bailout must pass so credit begins to flow – and soon.

GM's numbers were a bit brighter - down only 15 percent in September because of the "employee pricing for everyone" promotion. That deal is now over. But GM is offering 0 percent financing for many 2008 vehicles.

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