Ford Motor Co posted a 40% drop in January sales in the US, the sharpest decline for the No. 2 US automaker in 10 months of double-digit sales declines in the world’s largest market for new cars and trucks.
The results from Ford on Tuesday were among the first from major automakers for a month expected to show overall sales near 27-year lows, extending a stretch of 15 months of consecutive auto sales declines.
Chrysler LLC said it expected overall US auto sales for January to drop by as much as 35% after a sharp decline in sales to car rental agencies. The expected deep decline in sales comes despite more aggressive discounting by all of the automakers, including cut-rate financing, employee pricing and cash-back rebates.
Industry-tracking service Edmunds.com estimated that industry spending on such incentives rose almost 13% in January from a year earlier to more than $2,700 on average.
Industry-wide US auto sales for January represent one of the first 2009 indicators of consumer demand and account for as much as a fifth of retail sales. The downbeat sales reports are expected to add weight to the view that the battered sector will be a further drag on US output in the current quarter.
US auto sales fell 18% in 2008 to about 13.2 million vehicles, battered by a spreading credit crunch, plummeting consumer confidence and a deepening recession. Sales for 2009 are expected to drop to near 10.5 million vehicles, the lowest level since 1982.
But even that comparison understates the depth of the downturn since the US population has increased about a third since the early 1980s. Ford’s sales decline was worse than most analysts had expected. Shares of the automaker slipped 2%.
S&P said in a note for clients that further such sales declines for Ford could make it hard for the automaker to avoid taking government loans. Ford’s rivals General Motors Corp and Chrysler are reorganizing under the terms of a $17.4 billion federal bailout.
EUROPE FOLLOWS ON THE WAY DOWN
Although the US auto industry is entering its fourth year of declining sales, the deepening slowdown hit European and Asian markets hard in the final months of 2008. In Germany, car registrations dropped 14% in January while production tumbled 34%, the German auto industry association VDA said.
European automakers also reported double-digit sales drops for January: Mercedes-Benz maker Daimler AG and Porsche down 36%, and Volkswagen AG off 12%. Separately, Swedish truckmaker Scania posted a bigger-than-expected fall in Q4 earnings and said it would slash its dividend in the face of plunging market demand that saw truck orders fall 98%.
In Asia, Japan’s biggest auto parts maker Denso Corp forecast its first-ever annual loss and said it would halve spending on facilities in a bid to return to profit. Toyota Motor Corp, the world’s No. 1 carmaker, which is due to report Q3 results on Friday, is expected to miss its target because of falling demand. A string of other suppliers belonging to the Toyota group also warned on Tuesday of gloomy outlooks for the business year. (Reuters)