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Ford slows downhill slide

Thu., July 2, 2009

Overall industry decline smallest since September

Auto sales in June, led by Ford Motor Co., showed what could be first signs of a recovery after a long and bleak run.

The United States’ second-largest automaker reported a modest 11 percent decline in sales, compared to a year earlier, its smallest slide in more than a year.

General Motors Corp. and Toyota Motor Corp. saw more substantial dips, of 34 percent and 32 percent, respectively, but both showed improvement over recent months’ dismal results.

Ford, the second-largest U.S. automaker sold 148,153 cars and light trucks in June, compared with 167,090 a year earlier. GM, which still sells about one in five cars and trucks in the country, led all automakers with 176,571 sales, down from 265,937.

Toyota sold 131,654 vehicles, down from 193,234 in June 2008.

Ford said it expected that overall industry sales for the month declined about 27 percent, which would be the best result since September.

“The tide seems to have shifted in recent weeks,” said Jim Farley, Ford’s head of marketing and communications. “We remain grounded, however, given challenging industry and economic conditions.”

Despite the optimism from Ford, the market continues to hover far below even what would have been called depressed levels a year ago. On an annualized basis, industry sales in June hit a level of 9.8 million units, which is down 40 percent from the industry’s sales rate for most of this decade.

Moreover, sales remained very weak in several key regions, including California, the largest U.S. auto marketplace, due to the area’s continuing housing problems.

“There are still some strong head winds out there,” said Michael DiGiovanni, GM’s top sales analyst. “We were hoping that the (sales rate) would have come up better.”

Ford and GM said they expected the third and fourth quarters to be a bit better and that full-year results would come in closer to 10.5 million cars and light trucks sold.

In the last month, with positive – or at least less negative – signs coming from the economy, there has been hope in the industry that things might be turning around.

A key boost to that could be the government’s so-called “cash for clunkers” program, which will allow drivers to get up to a $4,500 credit for trading in fuel-hungry older cars for new vehicles.

“The timing of the program couldn’t be better,” Farley said.

Similar programs in Germany, Brazil and elsewhere have substantially boosted sales in those countries.

Another key will be the fate of GM and Chrysler. While doubts swirled about the troubled automakers throughout the winter and spring, their sales entered a veritable free-fall.

Now, at least, with the filing of bankruptcy by Chrysler in April and GM on June 1, there is more certainty in an industry that seemed overshadowed by its financial woes.

With GM and Chrysler’s worst problems likely behind them, and the federal government backing warranties on their vehicles, consumers appear to be – cautiously – returning to dealership lots.

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