US car firms report sales slump
Sales of automobiles in the United States fell as much as 35% in January, compared to the same month a year ago, as manufacturers reported their January sales.
Ford Motor Company sales dropped 42% last month from the previous year. General Motors reported a 49% decline. Chrysler was hardest hit among the domestically owned manufacturers with a plunge of 55%.
The decline in sales has not been limited to just US manufacturers. Japanese automaker Toyota reported a 32% drop in US sales from a year earlier, Nissan Motors dropped 30%, and Honda sales dropped 28%.
Subaru and South Korean Hyundai Motor Company were two of the few auto firms that reported an increase in sales. They posted gains of eight and fourteen percent, respectively.
On an annual basis, sales overall have also been plummeting. Industry-wide US car sales dropped 18% last year to 13.2 million automobiles.
Last month, GM and Chrysler were given loans worth US$17.4 billion from the government after they warned of imminent bankruptcy.
General Motors (GM) and Chrysler have both begun to offer layoff packages to their workforces.
The automobile manufacturers have been hard hit in the recent economic downturn and have been forced to seek federal aid from the U.S. government. Reports say that GM’s package includes a $20,000 cash payment and a $25,000 new vehicle voucher.
Chrysler will offer a $25,000 vehicle voucher and $50,000 with healthcare and $75,000 without. Both will offer the deal to most United Auto Workers (UAW) union members – 62,000 at GM, which is seeking to cut 31,500 jobs by 2012.
The two companies have received $13.4 billion in federal loans to keep them operating, but Congress required them to produce viability plans to demonstrate they were making significant cost cuts and labor concessions in return for the money.
UAW workers in Detroit earn $28 an hour; their replacements will earn about half that. The UAW’s “jobs bank”, a system where workers without duties are still paid, has stopped at both companies.
GM is also attempting to engineer a debt-for-equity swap, reducing its liabilities from $27.5 billion in unsecured debt to $9.2 billion. It is also seeking to sell a truck manufacturer, the Delco Electronics parts group and the Hummer and Saab Automobile vehicle brands.