Auto sales in the US slumped by a massive 36 per cent year-on-year during December, bringing the curtain down on a depressing year for the industry in the country, it was confirmed today (6th January).

Demand sunk to a 16-year low over the course of 2008 and the 'Big Three' of Chrysler, Ford and General Motors (GM) posted declines of 53 per cent, 32 per cent and 31 per cent respectively last month.

Those figures mean that GM's annual total is the smallest in its domestic market since 1959, while Toyota and Honda both posted their first annual decrease in US sales since the mid-1990s.

According to statistics released by Autodata Corporation, total vehicle sales were 13.2 million, down from 16.1 million in 2007 - and also representing the smallest figure since 1992.

Stephanie Brinley, an analyst with Michigan-based firm AutoPacific Inc, told Bloomberg: "It's one of the worst years ever, and this year will be worse. It's not a gas problem. It's not a credit problem. It's a consumer confidence problem, and it's worldwide."

Hyundai, whose US sales plummeted by 48 per cent year-on-year during December, has responded by launching a new marketing campaign which allows US consumers to return new vehicles within a year of purchase if they lose their jobs.

John Krafcik, Acting Chief Executive of Hyundai Motor America, explained that the move was motivated by the company's desire to "reassure shoppers that Hyundai still represents the best value in the auto industry".

It was also confirmed yesterday that Democratic Senator Barbara Mikulski, a member of the Appropriations Committee, is proposing to revive sales figures by extending tax credits to car buyers.

The proposal is similar to a bill passed by the Senate in November which would see interest loans on car payments - plus sales and excise taxes on vehicles - be tax deductible.

Such a move is widely regarded as a less controversial way of getting consumers back into showrooms than the $17.4 billion low-interest government loan recently granted to GM and Chrysler.

However, the news is not all doom and gloom for the US auto industry, with Volkswagen seemingly showing the way to recovery with a range of new models and its enduring Jetta.

The German automaker increased its share of US car sales to 2.8 per cent in December - a year-on-year rise of 0.7 per cent - and it is currently building a new $1 billion factory in Tennessee.

In addition, Daimler AG's Mercedes-Benz upped their US market share to 2.3 per cent from two per cent, with its annual sales down by just 1.5 per cent - mainly due to the popularity of its Smart mini-car, which was new to the country last year.

Meanwhile, similarly worrying statistics were recorded in Canada, where December sales slumped by 21 per cent and full-year sales were down by 1.1 per cent to 1,635,986 units.

The Big Three suffered their worst yearly loss since 2001, GM posting a decrease of 11.1 per cent, Ford seeing sales slide by 5.9 per cent and Chrysler recording a drop of 4.2 per cent.

Furthermore, automotive consultants DesRosiers predicted that sales in the country will fall by a further nine per cent to just over 1.5 million units in the coming 12 months.

However, Toyota (up 11.3 per cent) and Honda (up one per cent) both enjoyed record annual Canadian sales, despite posting December declines of 36.2 per cent and 40.8 per cent respectively.

Toyota did not enjoy such a good year at home in 2008, yesterday confirming that its year-on-year sales in December fell by 18 per cent and that its annual sales were down by 7.4 per cent.

In addition, the automaker has announced that it will be halting production at all 12 of its factories in Japan for 11 days in February and March as it attempts to decrease its stock of unsold vehicles.

The latest revelation - which follows a prior confirmation of a three-day suspension in January - adds further weight to the company's first production cuts since back in 1993.

The Japanese industry as a whole spent 2008 ramping up its efforts to improve the chances of mass producing new smaller, more fuel-efficient vehicles in the current economic climate.

Improvements in the lifespan of lithium-ion batteries and notable proposed price reductions have accelerated the progress of a number of manufacturers in relation to electric car models.

Mitsubishi Motors, for instance, expects to be able to roll out its iMiEV car - which can run for 100 miles on one charge - for under $30,000 by 2010, with the aid of government subsidies, AFP reports.

Kazuhiro Yamana, Head of Public Relation for the company, told the news provider: "The price and the short mileage per charge are the two biggest challenges we must address.

"But we expect that technological breakthroughs in lithium-ion batteries will continue, realising longer distances - for example, triple the current distance in ten years."

Fuel-efficient vehicles are becoming increasingly popular in the US and European markets, and the technology - such as the new zero-emission, fuel cell car driven by Congressman-elect Eric Massa on his way to Capitol Hill yesterday - is improving all the time.

Elsewhere, UK drivers are increasingly being forced to hand back cars they bought on hire purchase as the threat of 'negative equity' is growing as a result of plummeting resale values.

The Daily Telegraph reports that figures released by Auto Express suggest that the combined shortfall for drivers of such vehicles is now £272 million, with prestige models being particularly badly affected.

A spokesman for the AA told the newspaper: "This is hitting people wanting to get high aspiration vehicles at an affordable price [as they] will have been hit by the crash in value.

"These could be very expensive cars and the losses could be crippling because of the change in the financial world."

Finally, China's third-largest automaker Dongfeng Motor Group has recorded successful results for 2008, posting a sales increase of 14 per cent over the course of the year.

The figure - which sees it outperform GM in the country - is being largely attributed to its Japanese partners Honda and Nissan attracting buyers with a host of new models.

"Honda remains a solid performer last year and Nissan gained momentum with the help of new models such as the new Teana," Chen Qiaoning, an industry analyst with ABN AMRO TEDA Fund Management, told Reuters.

According to the news provider, Kevin Wale, President and Managing Director of the GM China Group, has expressed his belief that China will remain the fastest-growing auto market over the next decade.

Sources:

U.S. December Auto Sales Dive 36%, Drag Industry to 16-Year Low (06/01/09)
http://www.bloomberg.com/apps/news?pid=20601087&sid=auk6v.fvkIhM&refer=home

Car sales plunge heralding bleak 2009 (06/01/09)
http://uk.reuters.com/article/ousiv/idUKTRE5043X020090106?sp=true

Hyundai rolls out no-cost car return program (05/01/09)
http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSN0538278020090105

2ND UPDATE:US Dem Senator To Push For Tax Credits For Car Buyers (05/01/09)
http://money.cnn.com/news/newsfeeds/articles/djf500/200901051555DOWJONESDJONLINE000451_FORTUNE5.htm

Volkswagen Grabs Share in U.S., Aided by Small Cars (Update1) (06/01/08)
http://www.bloomberg.com/apps/news?pid=20601100&sid=aBT2M5ffjVlk&refer=germany

December Canadian auto sales sag 21 percent (05/01/09)
http://uk.reuters.com/article/marketsNewsUS/idUKN0539063120090105?pageNumber=2

Toyota shuts plants for 11 days (06/01/09)
http://news.bbc.co.uk/1/hi/business/7813022.stm

Japan rushes toward zero emission car (05/01/09)
http://www.rdmag.com/ShowPR.aspx?PUBCODE=014&ACCT=1400000101&ISSUE=0901&RELTYPE=IDN&PRODCODE=00000000&PRODLETT=M&CommonCount=0

Thousands of drivers who bought cars on hire purchase face 'negative equity' (06/01/09)
http://www.telegraph.co.uk/motoring/news/4127056/Thousands-of-drivers-who-bought-cars-on-hire-purchase-face-negative-equity.html

China's Dongfeng Motor leads GM in 2008 car sales (06/01/09)
http://www.reuters.com/article/ousiv/idUSTRE50528020090106