Falling US sales hit Ford and GM

Consumers are more reluctant to make big purchases

Ford and GM have suffered setbacks in their efforts to turn around their respective businesses after their US sales both fell nearly 20% last month.

Ford suffered a 19% fall in total US sales in July with demand from individual customers dropping 17%.

GM's sales also fell 19%, prompting experts to claim the slump in the housing market had made buyers more cautious and affected industry demand.

Ford appeared to turn a corner when it recently made a $750m (£370m) profit.

'Sobering'

Cost-cutting and the sale of Aston Martin helped contribute to the improvement in the company's financial position in the second quarter.

But Ford said July's disappointing figures, when it sold 195,245 vehicles, demonstrated that it still had a long way to go to revive its fortunes.

We know we have a lot of work to do Mark Fields, Ford

"July is a sobering reminder of the economic and competitive challenges we face," said Mark Fields, the Ford executive in charge of its North American business.

"We are encouraged by the progress we have made and consumers' responses to our new products. At the same time, we know we have a lot of work to do."

Sales of Ford models were generally weak although new crossover vehicles - which combine features from sports utility vehicles and smaller, more fuel-efficient cars - performed better.

Tough climate

Jaguar sales were down an alarming 43%.

Ford is considering selling both Jaguar and Land Rover as part of a radical restructuring of its business as it tries to get to grips with more competitive and successful Japanese rivals.

July was a tough month for the industry as a whole as growing economic worries and higher gas prices curbed spending in the US.

"The twin headwinds of gas prices and housing are clearly having an impact on the business," said GM's chief sales analyst Paul Ballew.

Chrysler saw sales fall 8% although Nissan saw a 2% rise on demand for a number of popular models.