Ford, GM post biggest drops, industry sales slump continues

Ford Motor Co. and General Motors posted the sharpest sales declines among major automakers as the industry headed toward its sixth straight monthly drop of more than 30 percent.

Ford's March sales fell 42.1 percent and GM's were down 44.7 percent, for its fifth decline of more than 40 percent in the past six months. Chrysler LLC tumbled 39.3 percent, its smallest percentage slide since October. Nissan North America dropped 37.7 percent, American Honda 36.3 percent and Toyota Motor Sales U.S.A. 39 percent.

The initial results are in line with the average forecasts of analysts who had projected a seasonally adjusted annual sales rate below 9 million units. That would mark a new 27-year low.

"We believe we may be at or near the trough of the industry's year-to-year comparisons but do not see an uptick in industry demand before fourth-quarter 2009 at the earliest," Standard & Poor's equity analyst Efraim Levy said in a note to investors.

Ford economist Emily Kolinski Morris said the company has seen "some encouraging signs" that the pace of economic decline could be moderating.

"It's too early to say the market is bottoming out," she said during a conference call. "Uncertainty remains for the next few months, and the risk of industry restructuring is another wild-card factor."

Ford said it built 349,000 vehicles in the first quarter, 26,000 fewer than estimated in its latest forecast.

Late yesterday, American Honda Motor Co. said it would shut factories for 13 days in May, reducing North American production by 62,000 vehicles.

Another low

Analysts continue to point to consumer confidence as the main culprit for slumping sales, followed closely by still-tight credit and worries about the viability of GM and Chrysler. Those companies are surviving on $17.4 billion in federal loans.

On Monday, President Barack Obama denied their requests for as much as $21.6 billion in additional aid and raised the specter of bankruptcy if they don't complete satisfactory restructuring plans this spring.

Consumer confidence levels in March stayed flat with the record low reached in February, according to the monthly index conducted since 1967 by the Conference Board, a market information group.

GM and Ford both announced programs yesterday to cover car payments for buyers who lose their jobs. The U.S. unemployment rate stands at 8.1 percent, a quarter-century high, as the recession extends into a 17th month, making it the longest since the Great Depression.

The first automaker to adopt a job-loss protection program, Hyundai, is one of just four brands to record an increase in U.S. sales this year through February. Subaru remains 1.6 percent ahead of last year's pace despite a 2.6 percent March decline. Daimler AG's Smart, launched in early 2008, posted a 1 percent March gain and also remains up for the year. The other, Kia, has yet to report for March.

Sales of the Volkswagen brand fell 19.7 percent, and Mercedes-Benz slid 25 percent.

Last year, 13.2 million light vehicles were sold in the United States. Through 2008, the average this decade was 16.4 million annually.

Amy Wilson contributed to this report.

By Chrissie Thompson- Automotive News