Page last updated at 21:15 GMT, Tuesday, 3 February 2009

US car firms report sales slump

Ford trucks lined up at one of its Michigan plants
Ford reported a record loss for 2008

Ford, General Motors (GM) and Chrysler have all reported a sharp fall in US sales in January, as industry-wide American sales fell to a 27-year low.

Sales at Ford plunged 42% last month, compared with a year earlier, while those at GM declined 49%, and Chrysler was hit by a fall of 55%.

GM and Chrysler needed a $17.4bn (12bn) rescue package from the US government in December.

While Ford last week reported a record $14.6bn annual loss for 2008.

'Monster'

American car sales have slumped as consumers have cut back on making large purchases as the US recession has deepened.

Stockpiled GM cars at its Lordstown plant in Ohio
US consumers have cut back on buying new cars

"We're in the mouth of this monster, and we have a lot of work to do," said Chrysler sales chief Steven Landry.

Chrysler argues that more customers would like to buy new cars, only they can't secure the loans to do so, because of the continuing problems in the US banking sector.

January's decline has also hit sales of foreign cars in the US. Toyota's January American sales were down 32% from a year earlier, while those at Nissan dropped 30%.

"The truth is that the entire auto industry finds itself in the eye of this economic storm," said Toyota US executive Bob Carter.

However, both Subaru and Hyundai bucked the trend, with their January US sales rising 8% and 14%.

Government support

GM and Chrysler gained their bail-out from the White House last month after they warned that they were running out of cash.

The financial situation at Ford is not as bad, although it has secured a $9bn government credit line that it will be able to access in the future if needed.

GM said on Tuesday that it would offer voluntary redundancy to 22,000 US employees as it seeks to cut costs.

Industry-wide US car sales fell 18% in 2008 to 13.2 million vehicles.

Sales for 2009 are expected to drop near 10.5 million, analysts say.

"Even with a boost from the anticipated federal stimulus plan, we see consumers taking a cautious approach to large ticket discretionary purchases," said S&P equity analyst Efraim Levy.

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