Workers in the US car industry are facing a summer of factory shutdowns, overtime restrictions and additional lay-offs as the worsening economy sends vehicle sales into a sharp decline.
Figures from all the major car makers yesterday showed sales in March were down in double-digit percentages compared with a year ago, and industry executives said 2008 is on course to be the US's worst year for sales in 15 years.
"I'd like to be able to tell you the worst is behind us but I can't really say that," Ford's marketing chief, Jim Farley, told investors, as the company revealed a 14 per cent slide in sales of cars and light trucks. General Motors said its monthly sales had collapsed by 19 per cent, while Toyota revealed a 10 per cent decline.
Worse for the industry, the most expensive – and therefore the most profitable – vehicles, such as SUVs, are being deserted by customers in favour of cheaper, more fuel-efficient models. Sales of Ford's F-Series pick-up trucks were down by a quarter.
The market is "gripped by recession fears", said German manufacturer Porsche, whose sales were down by 25 per cent.
The price of petrol at US pumps has hit new highs since the world oil price exceeded $100 a barrel, adding to the misery of drivers who are also being squeezed by a rising cost of living and increased mortgage payments. Rising job insecurity is also putting people off vehicle purchases, analysts said, and car makers are piling on special offers to try to lure reluctant buyers.
Jesse Toprak, director of industry analysis for Edmunds.com, an industry website, said: "To combat this soft market, auto makers are once again putting remarkably generous dollar amounts on the hoods and, ironically, re-establishing consumer expectations that they will be offered dramatic deals. It's a car-buyer's market, and that will likely be true for months to come." An Edmunds.com survey of incentives, taking into account discounted interest rates and lease prog-rammes, as well as cash rebates to consumers and dealers, found that the average car maker was subsidising each vehicle sold to the tune of $2,435 – 8 per cent higher than a year ago.
Ford executives predicted that the sales figures released by the company and its rivals yesterday would add up to an annualised rate of sales in the "low 15 million" range, the worst rate of annualised sales since 1993, as the US was emerging from recession.
All the US manufacturers are cutting back production this year, and many have made generous redundancy offers to long-time employees, whom they hope to replace with younger workers on cheaper contracts. Chrysler said last month that it would shut its entire US operation for two weeks in July, putting workers on enforced vacation, and Ford and General Mot-ors are also readjusting production schedules.Reuse content