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Sharp Declines in Sales for Automakers in January

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GM, Ford, Toyota Post Shart Decline

General Motors Corp. said its U.S. light-vehicle sales for January plunged 49% while Ford Motor Co. said its sales fell 40%, further intensifying the financial pressure on the two largest U.S. auto makers. Meanwhile, Toyota Motor Corp. reported a 32% drop, as the Japanese company sold 117,287 vehicles in the U.S. last month. Its passenger-car sales slid to 67,263 from 94,586, while its light-truck sales fell to 50,024 from 77,263.

Also, Honda Motor Co. reported a 28% drop to 71,031 vehicles while Nissan Motor Co. posted a 30% decline to 53,884.

GM said it sold 129,227 vehicles last month compared with 252,565 in January 2008. It said its sales to fleets such as rental-car companies of just more than 13,000 vehicles was the lowest level since 1975.

GM said it would cut North American production in the current quarter to 380,000 vehicles from the earlier goal of 420,000.

Ford's decline was highlighted by a 90% plunge in sales to car-rental companies, which themselves have been under financial straits.

Edmunds.com last week projected total U.S. sales of 730,000 for January -- much lower than the moribund results of the prior four months. And if Ford is any indication, that dour forecast may prove too optimistic as the company's domestic light-vehicle sales fell to 93,041 from 155,753, the first time in many years its monthly total dropped below 100,000. Edmunds had forecast 109,000.

The Detroit Three, even before the sales plunge started in September as consumers pulled back and auto-loan financing dried up, sought billions of government assistance to carry them through the sales doldrums and credit crunch.

GM and Chrysler LLC in December received $17.4 billion in loans to keep them afloat through the first quarter as the companies come up with new restructuring plans by Feb. 17. Ford has repeatedly said it doesn't need immediate financing.

At Ford, car sales dropped 35%. Sport-utility vehicles continued their slump with a 53% decline. Trucks and vans decreased 42% as the F-series pickup fell 39%.

While traffic to dealer showrooms has slowed, those woes have been exacerbated by plunging fleet sales. Such buyers include car-rental companies, which have financing troubles of their own amid falling rental demand and have been cutting back purchases. Auto makers, at the same time, have wanted to reduce such sales as they have lower profit margins and tend to reduce resale values.

Ford's fleet sales tumbled 65%, including the 90% drop to daily rental customers, while retail sales declined 27%. The company said its retail market share rose 0.3 percentage point from a year earlier to 12.7%. It was the fourth-straight monthly gain, the first time Ford has achieved that since 1995.

The slack sales since the summer ended has resulted in auto makers around the world slashing production. Ford, for its part, anticipates a more-than-40% cut for the first quarter from a year earlier. Its inventory finished January at 420,000, down 27%.

Among other auto makers to report, Daimler AG said U.S. sales for its Mercedes-Benz division dropped 43% to 12,209 vehicles, while Volkswagen AG reported its U.S. unit's sales fell 12% to 12,744.

"We know 2009 has the potential to be another extremely tough year for the automotive industry due to continued challenges with the economy," said Mark Barnes, chief operating officer, Volkswagen of America. However, he noted that all five of VW's new products in the U.S. have their first full year of sales ahead of them.

In a rare bit of good news, Subaru of America Inc., a subsidiary of Japan's Fuji Heavy Industries Ltd., said its January sales rose 8%.

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Gm's incentives weren't very good last month on most of its models. If they want to clear inventory in a bad economy, they'll have to decide if cutting prices or sacrificing volume is the answer.

Note: VW and Subaru, both offer aggressive leasing and look at their sales. Not that affected. Take a hint GM. When you pulled leasing off the table, that's why a lot of your business went away.

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