US car sales fall below China’s for first time

US car sales fall below China’s for first time

By John Reed in Detroit

Published: February 3 2009 20:58 | Last updated: February 4 2009 00:13

Annualised US car sales slipped below 10m last month – and were less than China’s for the first time – in spite of steep discounts offered by carmakers and government efforts to ease lending.

General Motors’ monthly sales of cars and light trucks fell by 49 per cent last month, Chrysler’s by 55 per cent and Ford Motor’s by 40 per cent, including vehicles made by Volvo, its Swedish premium brand.

“This is the first time in history that China has surpassed the US,” said Michael DiGiovanni, GM’s head of global sales and industry analysis.

GM estimated the overall annualised selling rate for cars at 9.8m in the US in January, compared with 10.3m in December, and less than China’s estimated selling rate of 10.7m last month.

The slide in car sales hit all major manufacturers, but will intensify the pressure on Detroit’s carmakers in particular, which are scrambling to avoid bankruptcy. GM and Chrysler are working on restructuring plans due by February 17, as conditions of their $17.4bn emergency government loans.

Autodata, a market research firm, put total estimated annual industry car sales at 9.6m, their lowest level since 1982.

The slump came in spite of generous incentives offered by carmakers last month, including employee pricing deals, and an infusion of federal cash to the carmakers’ lending arms. GMAC and Chrysler Financial are accessing a total of $7.5bn of troubled asset funds.

GM and Ford both attributed much of the slide in demand to sharply lower purchases by fleets.

Car-rental companies typically take vehicles on just-in-time delivery, and most US car plants were idled for much of last month on extended holiday shutdowns.

“Today we’re at the vortex of the economic downturn, and it’s difficult to talk about recovery,” said Emily Kolinski Morris, Ford’s senior economist.

However, she added that the Federal Reserve’s aggressive actions were beginning to have an impact on market conditions. “There are some faint signals emerging that we may be nearing the bottom,” Ms Morris said.

The rout in the US car market extended to Detroit’s competitors, including Toyota, whose January sales fell 32 per cent, and Honda, which sold 28 per cent fewer vehicles. Cars sold in the US at an annualised rate of 10.3m in December. They were highest this decade at 17.4m in 2000.

GM said it still believed US car sales would exceed China’s for the full year of 2009, although China’s could be higher if the US stimulus package was less effective than hoped.

Total US industry sales were 13.5m last year, according to GM, compared with 9.1m in China.

http://www.ft.com/cms/s/0/e99e8514-f234-11dd-9678-0000779fd2ac.html

 

dow up 140 points. Apparently no one really cares.