GM, Chrysler could make March sales decline 43%
General Motors Corp. and Chrysler LLC might drag U.S. auto sales to a
43% decline this month as buyers look elsewhere because of the
automakers' financial weakness, Deutsche Bank AG said.
A drop of that size would equate to U.S. industry sales at a seasonally
adjusted annual rate of 8.6 million vehicles, New York-based analyst Rod
Lache wrote in a note Monday. February's rate of 9.1 million autos was
the lowest since December 1981. GM and Chrysler may fall 47% and 45%,
while Ford Motor Co. may be down 41%, Lache wrote.
Dwindling demand adds to the pressure on GM and Chrysler, which are
operating with $17.4 billion in U.S. loans and are seeking as much as
$21.6 billion more to survive. They face a March 31 deadline to show the
Treasury Department they can remain viable.
"Solvency concerns are clearly impacting these automakers," Lache wrote.
"Ford appears to be benefiting from the distress being experienced by
its domestic peers."
Lache cited a Thursday report by CNW Research of new-car buyers'
preferences that found a 12% decline in the number of people who named
GM as their top vehicle choice. Chrysler dropped 33%, and Ford rose 12%.
He rates Detroit-based GM as "sell" and Ford as "hold."
Ward's Automotive Reports estimated that industry sales may drop 40% in
March, with a 43% plunge for the three U.S.-based automakers.
Industry sales through mid-month ran at an annual rate of 8.8 million,
Chrysler Chief Financial Officer Ron Kolka said Wednesday in an
interview. GM CEO Rick Wagoner said in a Thursday interview that March
industry results were similar to February's.
GM rose 17 cents, or 5.4%, to $3.35 in New York Stock Exchange composite
trading. Ford gained 15 cents, or 5.5%, to $2.90.
Chrysler is owned by Cerberus Capital Management LP.