U.S. Automakers Continue Slump Through February
GM, Chrysler Say Bankruptcy Is Imminent Without More Aid
“Cash for Clunkers” provision not dead yet
U.S. auto sales continued their free fall into February, as big rebates and low-interest financing failed to lure people back into car dealerships and showrooms.
Today General Motors reported that its sales slid 53 percent in February compared with the same month a year ago, and Chrysler sales dropped 44 percent.
Ford’s sales tumbled 48 percent, despite distinguishing itself from cross-town rivals in recent months by keeping the company afloat without federal aid.
“The economic and competitive environment remains challenging,” said Ken Czubay, Ford vice president for sales and marketing, in a statement. “Ironically, these times provide the best opportunity to distance Ford from the competition.”
The steep drop puts additional pressure on GM and Chrysler, who are rapidly burning through cash while generating very little income from sales. After receiving $17.4 billion from the government in December, both companies say they will still be on the verge of bankruptcy without another cash infusion from the Treasury Department on March 31.
Earlier today Michigan Gov. Jennifer Granholm met with the Obama administration’s auto task force to discuss the Detroit automakers’ future. Members have also summoned Fiat chief executive Sergio Marchionne to Washington later this week to talk about the Italian automaker’s potential alliance with Chrysler.
The automakers had hoped the stimulus package would boost sales in the second half of this year. But some of the stronger auto programs were killed — namely a “cash-for-clunkers” proposal from Sens. Dianne Feinstein (D-Calif.), Susan Collins (R-Maine) and Charles E. Schumer (D-N.Y.) that would encourage drivers to trade in vehicles for more fuel-efficient cars and trucks.
As the economic decline deepens, few incentives are likely to bring sales up to normal levels — many consumers are just too reluctant to make such a big purchase right now, said Jim Hossack, an analyst with AutoPacific, an industry consulting firm. Plus today’s cars and trucks are just more durable.
“For most people in the new vehicle market, it’s really easy to defer the purchase — defer a month, defer a year, defer five years,” Hossack said.
But Mark LaNeve, vice president for GM’s North America vehicle sales, service and marketing, remained optimistic.
“It remains a tough and challenging market, but seeing some upticks in volume and showroom traffic compared with last month is encouraging,” he said in a statement.
U.S. Automakers Continue Slump Through February – washingtonpost.com
http://www.nytimes.com/2009/02/22/automobiles/22CLUNKER.html
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