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US car firms post worrying fall in sales
By Mike Ramsey |
March 5, 2009, Thursday
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Print Edition
Print Edition
UNITED States auto sales in February fell to a worse-than-expected rate and so low that the United States Treasury will face pressure to give more money to General Motors Corp and Chrysler LLC or let them fail, analysts say.
Industry sales plummeted 41 percent last month to a 9.1-million vehicle annual rate, the lowest since December 1981, according to Autodata Corp. GM, surviving with the aid of government loans, reported a 53-percent drop.
At that level, nearly every auto maker is struggling and GM and Chrysler, which are requesting US$21.6 billion in additional loans from the US government, said they likely will need it all. Extra government aid to keep the auto makers out of bankruptcy is making less sense, because it has become difficult to project an end to the sales declines, said Stephen Spivey, an automotive analyst at Frost & Sullivan in San Antonio.
"If it stays contracted at this rate for a significant period of time, the bridge loans are being recalled and they are going into bankruptcy," Spivey said on Tuesday in an interview after the sales results. President Barack Obama's automotive task force has been meeting with auto makers, union officials and auto-parts makers about how to address the collapsing industry. The government already has committed US$17.4 billion to GM and Chrysler. Both firms are working on a March 31 deadline to meet a restructuring plan that includes concessions from labor and lenders, or the loans can be called by the government.
The sales rate in February, below the 9.5 million average of 27 analysts' and economists' estimates compiled by Bloomberg News, "implies the maximum amount of government aid - if not more - will be necessary" for GM and Chrysler, said Rebecca Lindland, an analyst at IHS Global Insight in Massachusetts.
"These are obviously unsustainable levels which are causing almost every major auto manufacturer across the world to look for government aid," Michael DiGiovanni, GM's chief sales analyst, said on Tuesday. He said February is the low point in the market.
Toyota Motor Corp and other auto makers cannot sustain a selling rate as low as February's for a year or longer without laying off workers or taking more dramatic steps, according to Spivey.
Industry sales plummeted 41 percent last month to a 9.1-million vehicle annual rate, the lowest since December 1981, according to Autodata Corp. GM, surviving with the aid of government loans, reported a 53-percent drop.
At that level, nearly every auto maker is struggling and GM and Chrysler, which are requesting US$21.6 billion in additional loans from the US government, said they likely will need it all. Extra government aid to keep the auto makers out of bankruptcy is making less sense, because it has become difficult to project an end to the sales declines, said Stephen Spivey, an automotive analyst at Frost & Sullivan in San Antonio.
"If it stays contracted at this rate for a significant period of time, the bridge loans are being recalled and they are going into bankruptcy," Spivey said on Tuesday in an interview after the sales results. President Barack Obama's automotive task force has been meeting with auto makers, union officials and auto-parts makers about how to address the collapsing industry. The government already has committed US$17.4 billion to GM and Chrysler. Both firms are working on a March 31 deadline to meet a restructuring plan that includes concessions from labor and lenders, or the loans can be called by the government.
The sales rate in February, below the 9.5 million average of 27 analysts' and economists' estimates compiled by Bloomberg News, "implies the maximum amount of government aid - if not more - will be necessary" for GM and Chrysler, said Rebecca Lindland, an analyst at IHS Global Insight in Massachusetts.
"These are obviously unsustainable levels which are causing almost every major auto manufacturer across the world to look for government aid," Michael DiGiovanni, GM's chief sales analyst, said on Tuesday. He said February is the low point in the market.
Toyota Motor Corp and other auto makers cannot sustain a selling rate as low as February's for a year or longer without laying off workers or taking more dramatic steps, according to Spivey.
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