Auto Market GM and Ford Huge Drop in Sales February-3rd 2009

General Motors Corp. and Ford Motor Co. said U.S. sales plummeted at least 40 percent in January and Toyota Motor Corp. dived by almost a third, dragging the world’s biggest auto market toward the worst month since 1982.

The declines were 49 percent at GM, the largest U.S. automaker; 40 percent at Ford and 55 percent for Chrysler LLC. Toyota dropped 32 percent, Honda Motor Co. fell 28 percent and Nissan Motor Co. was down 30 percent.Today’s reports showed the toll of sinking confidence among car and truck buyers. GM, Ford and Chrysler said January deliveries may have tumbled to an annual rate of fewer than 10 million vehicles, after full-year sales averaged about 16 million this decade.

“In this downward spiral, as a company it’s hard to plan your business and as a consumer it’s hard to change your sentiment,” said Joe Barker, an analyst at consulting firm CSM Worldwide Inc. in Northville, Michigan. “We’re all looking for some sense of stability in the sale rate.”

Weak consumer and business demand adds to the challenges facing GM and Chrysler as they work to restructure with the help of $17.4 billion in federal loans, and ratchets up pressure on Ford, which says it doesn’t need government aid.

“If 20 percent to 30 percent retail declines persist, it would be more difficult” for Ford to avoid accepting U.S. loans, Standard & Poor’s equity analyst Efraim Levy in New York wrote in a report today. He rates Ford shares as “hold.”

Annual Sales Rate

Light vehicles haven’t sold at an annual pace of fewer than 10 million units in any month since the 9.8 million rate posted in August 1982, according to Autodata Corp. of Woodcliff Lake, New Jersey. The last full year of fewer than 10 million sales was 1970, according to trade publication Automotive News.

Hyundai Motor Co. was alone among large automakers with a gain, saying sales rose 14 percent.

January’s industrywide sales rate may have slipped to fewer than 10 million vehicles, Chrysler President James Press said today in an interview. Ford also raised that prospect, and Michael DiGiovanni, the chief sales analyst at Detroit-based GM, estimated the rate at 9.8 million. December’s figure was 10.3 million and November’s was 10.2 million, the lowest in 26 years.

GM’s Sales

GM said January sales fell to 129,227 cars and trucks, including a 58 percent decline in cars and 43 percent drop in light trucks. The automaker said it will cut North American first-quarter production 57 percent to keep pace with flagging demand.

Ford’s sales to non-business customers were in line with company expectations and retail demand “appears to be stabilizing,” the Dearborn, Michigan-based automaker said in a statement. Ford initially released a tally that didn’t include Volvo, showing a 39 percent drop for its domestic brands.

January had 26 selling days, 1 more than a year earlier. Some automakers release results adjusted for sales days, meaning the totals will be about 4 percent lower than unadjusted numbers. Bloomberg uses unadjusted figures.

Plummeting sales hamper efforts by GM and Chrysler to pare labor costs, cut debt, trim dealers and idle plants to reduce cash use and make a case to keep $17.4 billion in loans from the U.S. Treasury that kept them from slipping into bankruptcy. The companies face a Feb. 17 federal deadline for a progress report.

GM and Auburn Hills, Michigan-based Chrysler are offering cash and vehicle vouchers to entice more factory workers to leave and ended a 25-year-old program that assured union employees most of their pay even when there weren’t any tasks for them to perform.

Job Losses

Buyers shunned showrooms last month as shrinking payrolls sent consumer confidence plunging to the lowest in 42 years of recordkeeping by the Conference Board. The Labor Department probably will say on Feb. 6 that January nonfarm job losses totaled 535,000, based on economists surveyed by Bloomberg.

Tight credit also is damping sales, said George Pipas, Ford’s sales analyst. The Treasury Department provided a $6 billion bailout to GMAC LLC, the lender affiliated with GM, and $1.5 billion in loans to Chrysler Financial to help ease borrowing.


http://www.bloomberg.com/apps/news?sid=afVlRy4hJDLE&pid=20601087