DETROIT — Ford’s U.S. sales fell 48% in February, a sign the new car market could hit the lowest point in more than 27 years as huge rebates and low-interest financing fail to spur fearful consumers to make a major purchase.

Ford (F), the first automaker to report sales Tuesday, said it sold 99,060 vehicles last month, vs. 192,248 in February 2008.

The drop is another indication that economy-wide layoffs, the stock market decline and sliding home values are prompting people to hold on to their cars longer. Those who are buying are more often opting for a used car or truck.

It also casts further doubt on the financial viability of General Motors (GM) and Chrysler, making it difficult for them to sell cars and generate cash to supplement the $17.4 billion in government loans that are keeping them in business.

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 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 to try to bring out buyers. But despite the 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.”

Toprak says there is little automakers can do to spur sales, which are likely to drop for every major automaker.

“You can spend money on marketing or incentives. That’s all you can do,” he said. “Neither is having a big impact on sales. That tells us it’s really consumer confidence and the general negative state of the economy overall causing consumers to postpone making purchase decisions.”

SOURCE: USATODAY

WASHINGTON — President Barack Obama said Wednesday he’s prepared “to offer serious help” to Detroit’s auto industry, but only if its executives, workers and suppliers prove they’ll make the difficult changes needed for long-term success.

“My message is,” Obama said, “get me a plan.”

Speaking to the Free Press and reporters from about a dozen other newspapers in a wide-ranging interview, Obama signaled that government may have more aid to offer domestic automakers if they develop plans that detail their proposals to prod sales and make enough profits to sustain themselves in the future against an unmistakable drop in demand.

That could be especially good news for Chrysler LLC, which has said it needs another $3 billion on top of the $17.4 billion loan it and General Motors Corp. were granted in mid-December by President George W. Bush. Obama did not mention either carmaker by name but said he’s “monitoring the progress that is being made.”

Both automakers are required to submit plans to the Treasury Department on Tuesday and, if they are found lacking, the government could call the loans by the end of March, almost certainly triggering a bankruptcy.

It comes as the industry keeps losing jobs. This week, GM said it would cut 10,000 white-collar jobs worldwide, including 3,400 in the United States.

Although Obama declined to discuss details of possible help for the domestic auto industry, he reiterated his belief that a disorderly bankruptcy — one without significant preplanning to ensure that it had as minimal an effect as possible on the interconnected supply chain — could be “disastrous, not just for those states that are very reliant on autos, but for the economy as a whole.”

Late last year, when the automakers went before Congress to lobby for aid, there were estimates that as many as 3 million jobs could be lost nationwide if all three of Detroit’s automakers went belly-up all at once.

Ford Motor Co. is the only domestic automaker not seeking government money, saying it believes it can weather the horrendous sales climate.

In the interview, Obama declined to discuss specifics in the economic stimulus deal that emerged in Congress on Wednesday. He did say the stimulus includes money to help spark new technology — including $2 billion to develop and make the batteries needed for plug-in electric vehicles and hybrids of the future — and as much as $300 million to help convert federal fleets to more fuel-efficient vehicles.

But he said future help for automakers means not only that all the stakeholders “put some skin in the game” and make concessions if necessary but that the plans submitted by auto companies beginning next week take “into account what the auto market is going to look like over the next several years.”

“You know, if a plan is presented to us on 20 million” in annual “sales when we just know that’s not going to happen, then we’re going to have to ask them to go back to the drawing board,” he said.

SOURCE: FREEP.COM

WASHINGTON — The Treasury Department won’t make any decisions on additional aid to automakers or other aspects of the industry until Feb. 17, when restructuring plans are due from General Motors Corp. and Chrysler LLC.

“No decisions will be made on restructuring or anything else until we receive and review the restructuring reports,” and administration official said. “If the companies have determined some of the targets are not possible to meet in a timely fashion, they have the opportunity to explain their circumstances in their presentation.”

Treasury has retained two law firms and an investment bank to advise it in its oversight of the restructuring of GM and Chrysler. It has an auto unit within its financial recovery team and plans to add more members soon, the official said.

Both automakers must file restructuring plans by Feb. 17 in connection with their receipt of $17.4 billion in government loans. GM has received $9.4 billion of its $13.4 billion loan and is to receive the remaining $4 billion on Feb. 17. Chrysler has received $4 billion, but is still seeking another $3 billion.

The U.S. Treasury Department hired Cadwalader Wickersham & Taft LLP to review different restructuring possibilities. Cadwalader is working with Sonnenschein Nath & Rosenthal, a Chicago-based law firm. They also retained Rothschild Inc., a New York investment bank.

The Treasury Department is reviewing request for additional aid as well. The Motor Equipment & Manufacturers Association has suggested three different aid proposals that could be worth up to $10.5 billion, while the National Automobile Dealers Association wants the Treasury Department to allocate billions to banks to boost floorplan lending. The suppliers warned that many struggling members need funds before the end of the month.

Both the Treasury and the White House are in communication with suppliers and the auto companies, though no decisions have been made for an expansion of the current policy dealing with the auto industry, the official said.

Treasury Secretary Timothy Geithner and Larry Summers, director of the National Economic Council, are actively engaged “on the issues affecting suppliers, dealers and the industry as a whole.”

Sonnenschein was hired in November by Treasury to work on the auto loan issue, according to a Government Accountability Office report.

The contract was boosted to a total of $1.5 million on Dec. 31.

“Sonnenschein Nath & Rosenthal LLP is representing the Department of the Treasury in ongoing matters related to the 2008-2009 developments within the U.S. automobile industry,” firm spokeswoman Melissa Anderson said.

Sonnenschein partners working for Treasury are Robert McCarthy, Jeffrey Murphy, Aimee Cummo, and Stephen Whelan.

Both GM and Chrysler are working to win concessions from lenders and the United Auto Workers. GM wants to cut its debt by two thirds, exchanging its notes for equity. It also wants to pay for half of the payments it owes to a UAW-run trust fund that takes over responsibility for retiree health care in 2010 with stock.

They must show significant progress on becoming viable by March 31, or the Treasury Department could recall the loans — a move that would force the companies into bankruptcy.

The Treasury Department hasn’t named an auto czar, though Steven Rattner, a partner at the Quadrangle Group in New York, is still the leading candidate.

Stephen Girsky, a longtime auto industry analyst who is president of the private-equity firm Centerbridge Industrial Partners, is a leading candidate to become a key member of an auto restructuring team.

Girsky also is a former General Motors Corp. consultant who has recently advised the UAW on issues including the union’s efforts to obtain federal loans. On Wednesday, he attended a meeting with House Speaker Nancy Pelosi, D-Calif., and members of Congress on auto issues.

On Friday, President Barack Obama named a Centerbridge Partners LLC partner to his Economic Advisory Board, Mark T. Gallogly, who is founder and managing partner.

SOURCE: DETNEWS.COM