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The battered U.S. auto industry probably didn’t get any relief in January. Reuters reports, “U.S. auto sales for January are expected to drop to a 27-year low, extending a 15-month downturn and adding weight to the view that the hard-hit sector will remain a drag on the economy in the current quarter.”.

Bloomberg speculates, “Chrysler LLC and General Motors Corp., operating with $24.9 billion in U.S. support, may have led national auto sales to a fourth month of 30 percent decreases and a pace not seen since the recession of the early 1980s.”

Auto sales typically represent about 20 percent of retail sales during any given month, according to Reuters, meaning the numbers will “represent the first indicators of the shell-shocked state of U.S. consumer confidence for 2009.”

Adding to the consumer-driven sales drop is a decline in sales to car rental companies. According to CNN Money, many analysts forecast “a sharp plunge in purchases by rental car companies, which in a typical year can buy close to 3 million vehicles.” But those companies, “hit by a sharp drop in demand and a weak market for selling their older vehicles, are in the process of pulling back on purchases.”

One possible silver lining for automakers: easier credit. The Wall Street Journal notes, “The Federal Reserve reported on Monday that the net percentage of U.S. banks tightening consumer-lending standards fell in January for the first time since June 2007.” However, “consumer appetite for loans still was anemic: The net percentage of banks reporting stronger demand for auto and other nonmortgage consumer loans remains near a low. In other words, while the credit tightening isn’t getting any worse, demand for loans isn’t getting much better.”

With sales forecasts so low, automakers are using aggressive discounts to lure buyers back into dealerships. Research the best car deals with U.S. News’ car rankings and reviews.

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