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Last Updated: Tuesday, 1 August 2006, 23:10 GMT 00:10 UK
US carmakers suffer drop in sales
Chrysler cars showing discount offer
Chrysler has opted to extend its discounts in an effort to boost sales
US carmakers have been hit by further falls in sales, with the big names racking up double-digit declines.

Ford said sales sank 35.2% in July compared with last year, Chrysler sales fell 37% and General Motors 19.5%.

Part of the fall was blamed on the fact that heavy discounts seen last year were no longer on offer.

But rising fuel costs and interest rates have led consumers to opt for smaller, more fuel efficient vehicles - delivering a boost to Asian carmakers.

A 16% rise in sales at Japanese group Toyota pushed the automotive firm to the number two carmaker slot in the US - ahead of both Ford and DaimlerChrysler.

Elsewhere, fellow Japanese group Honda said its sales had risen 10% while those of South Korean carmaker Hyundai were up 6%.

Japan's Nissan was the only Asian firm to buck the trend, blaming weak car and truck sales for a 19.5% decline in July car sales when compared with the same time last year.

Changing demands

Ford sales highlighted the changing trends in US buying habits.

So-called "gas guzzling" sports utility vehicle sales were down almost 45% while retail sales for its mid-sized saloon cars - the Ford Fusion, Mercury Milan and Lincoln Zephyr - rose 18%.

"We are particularly encouraged by the response to our new cars, which offer distinctive styling and outstanding fuel economy," said Al Giombetti, president of Ford and Lincoln Mercury sales and marketing. "They are definitely the right products at the right time."

Many analysts blamed the expiry of high-cost discounted buyer offers for much of the decline in sales during the month.

But, Chrysler - the US unit of DaimlerChrysler - has opted to extend its package of discounts until the end of August to clear large numbers of unsold vehicles.

The group had been hoping to clear its warehouses ahead of the launch of a raft of new vehicles.

"Consumers are wrestling with higher interest rates and other increased household costs on a monthly basis," said Chrysler's vice-president for sales strategy, Michael Manley.

Meanwhile, there was further bad news from General Motors after it revealed it was restating its net loss for its recently reported second quarter.

It said losses had now risen by $200m to $3.4 billion (2.66bn) as a result of tax charges related to the sale of its 51% stake in its GMAC finance arm.

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