DETROIT (Reuters) - Chrysler LLC and Ford Motor Co (F.N: Quote, Profile, Research) on Thursday reported double-digit drops in October sales, lagging rivals in a slumping U.S. market widely expected to remain under pressure into next year.
Chrysler, which also announced plans to slash one-fifth of its factory work force and cut four slow-selling models, posted a 12 percent drop in monthly sales that was deeper than analysts had forecast.
Ford recorded a 13 percent monthly decline, reflecting a cutback in low-margin sales to car rental agencies as part of its own ongoing restructuring aimed at restoring its U.S. operations to profitability.
By contrast, Toyota Motor Corp (7203.T: Quote, Profile, Research) snapped out of a quarter-long slump to post a slight gain in U.S. sales, eclipsing Ford to hold onto the No. 2 spot in the world's largest vehicle market.
Sales for industry-leader General Motors Corp (GM.N: Quote, Profile, Research) were down almost 1 percent for October, outperforming a broad market it said had likely contracted almost 4 percent.
Major automakers said the slumping U.S. housing market, higher gas prices and wildfires in California had all combined to crimp sales in October despite signs that vehicle demand had steadied from an even rockier summer.
"I think it's fair to describe the industry as facing a number of challenges and that's showing up in performance," said GM chief sales analyst Paul Ballew.
I think it is fair to say that we're heading into a recession now, if we're not already in a recession. Autos are a big-ticket item that consumers purchase, along with housing. We've seen the housing market crash due to the subprime loan mess. We've seen almost a year's supply of houses come up on the market, and no one is buying because banks have been tightening their credit market after the free-wheeling and dealing of the housing speculation. Oil prices are up to almost $94 per barrel. Also note that back in September, consumer confidence dropped to a two-year low. I think that consumers are really starting to get worried about the economy, the housing market mess, the increasing energy prices, the losses in the financial sector (due to the housing mess), and they may be pulling back from spending. So consumers are holding off from buying new cars, and if they are buying new cars, they are going to purchase the best car for their money--which is why Toyota posted a slight gain in sales. I'd be curious to see what the auto sales would be for December, as automakers try to get rid of the 2007 models to make way for the 2008 models.
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