Auto slump continues: GM drops 53%, Ford 48%, Chrysler 44%,
DETROIT -- Major automakers' U.S. sales continued their deep slump in February, putting the industry on track for its worst sales month in more than 27 years as huge rebates and low-interest financing fail to spur fearful consumers to make a major purchase.
The slide casts further doubt on the financial viability of GM and Chrysler, which need to sell cars and generate critical cash to supplement the $17.4 billion in government loans that are keeping them in business.
Automakers and analysts have been predicting sales will rebound in the second half of this year, but they are becoming less certain. Massive layoffs, the stock market decline and sliding home values are prompting people to hold on to their cars longer, while those who are buying are more often opting for a used car or truck.
Emily Kolinski Morris, Ford Motor's top economist, said retail sales to individuals had been stable for four months but dropped in February, indicating that last month may not be the bottom for auto sales.
The bottom, she told reporters and industry analysts, can't be predicted. But she said Ford's forecast still calls for a modest second-half recovery as economic stimulus measures takes hold.
Industry analysts say when all the numbers are tallied, February sales could be worse than January's total of 656,976 light vehicles. That was the lowest monthly total since the industry sold 656,310 vehicles in December 1981, according to Autodata and Ward's AutoInfoBank.
The trough is likely even though automakers spent more on rebates, low-interest financing and other incentives in an effort to bring out buyers. But despite the fantastic deals, sales continued to slump.
"If it wasn't for the generous level of incentives now, we probably would be seeing even lower sales, if you can believe it," said Jesse Toprak, executive director of industry analysis for the auto website Edmunds.com. "It seems it can't get lower, but it could."
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