GM and Ford sales likely to fall again

The FINANCIAL — According to Gulfnews, General Motors and Ford Motor, the two largest US automakers, probably will say sales fell again this month as consumers stung by slumping home values steered clear of showrooms.

Sales of GM, Ford and Chrysler dropped by at least 14 per cent from year-earlier levels, according to the average estimate of eight analysts in a Bloom-berg survey. Automakers report their February resultson March 3.

Declines at the three US companies, which account for about half of all vehicles sold in the country, may have dragged industry sales lower for the seventh time in the last eight months. The deteriorating housing market and gasoline selling at a nine-month high helped drive the Reuters/University of Michigan consumer sentiment index to a 16-year low in February.

"The story in the month has been consumer confidence," said Jim Hossack, an industry analyst with AutoPacific Inc. in Tustin, California. "When you're looking at your home value, your investments, the markets, it's easy to say, `I don't think I need a new car right now."'

The industry's annualised sales rate probably fell to 15.4 million cars and light trucks from 16.6 million a year earlier, based on a survey of 18 analysts and economists. Automakers have sold an average of 16.8 million light vehicles in the US each year this decade.

Toyota's edge

Toyota Motor and Honda Motor, the two biggest Japanese automakers, may have boosted sales because they rely on more fuel-efficient vehicles than the light trucks that dominate the offerings of US producers.

Honda, for example, gets about 44 per cent of its sales from vans, pickups and sport-utility vehicles. At Chrysler, the figure is 75 per cent.

Toyota's February sales probably rose 3.5 per cent from a year earlier, while Honda's increased 3.1 per cent and Nissan Motor Co.'s gained 1 per cent, Jesse Toprak, an Edmunds.com analyst in Santa Monica, California, said in a February 26 note.

Ford's fade

Ford may post a 12 per cent decline even after it stepped up discount deals in the second half of the month, Rod Lache, a New York-based analyst with Deutsche Bank AG, said in a February 26 research note.

"The economy is going to be the driver of auto sales and consumer spending," said George Pipas, chief sales analyst for Ford, in Dearborn, Michigan. He said demand is at the "low end" of the range Ford had expected, without elaborating. He and spokesmen for GM and Chrysler declined to comment on February's results.

Small and midsized cars and so-called crossover vehicles that combine traits of sedans and SUVs performed better than other models for Ford, Pipas said. Big pickups, such as the F- Series, and midsized and large SUVs had the biggest falloffs, he said. The F-Series is the nation's top-selling vehicle.

Detroit-based GM's US sales also probably dropped 12 per cent in February, including a 14 per cent slide in light truck sales, Chris Ceraso, a Credit Suisse analyst in New York, said in a February 26 note.

GM's sweetener

GM, the biggest US automaker, offered $1,000 cash bonuses on top of existing incentives for many models this month. The sweetened deals may have tempered GM's drop, Ceraso said.

GM last month bucked an industrywide sales decline with a 2.6 per cent increase. Ford, Chrysler and the biggest Asian automakers all reported drops.

More-stringent lending practices after the collapse in the subprime mortgage market, along with prospects that home values will keep falling, are weighing on consumers, economists said.

Forecast: Lowest in a decade

Chrysler President James Press said he thinks there is a chance that US sales for 2008 will be lower than 15.5 million cars and light trucks. That compares with 16.1 million vehicles last year, the lowest total in almost a decade.

The average forecast among the eight analysts in the Bloomberg survey is for a 16 per cent plunge at Chrysler and 14 per cent drops at GM and Ford. The estimates are adjusted for one additional selling day this month than in February 2007; the figures are about 4 percentage points lower than unadjusted ones would be.

Ford fell 9 cents to $6.53 at 4pm on Friday in New York Stock Exchange composite trading and has slipped 17 per cent in the past 12 months. GM dropped $1.22 to $23.28 and has declined 27 per cent in the past year. Toyota's American depositary receipts lost $2.02 to $108.55. They are down 19 per cent since February 28, 2007.