Cash before cuts, say US dealers

AMERICAN car dealers want the Obama administration to focus on freeing up credit markets as a means of helping the car industry, rather than try to close dealerships as part of an industry restructuring.

The plea came as US February registration data showed a 41 per cent slump in sales compared to the previous February.

Sales of each of the top six manufacturers fell by more than 37 per cent, led by industry leader General Motors whose sales were down 53 per cent.

President Obama’s task force will decide whether to call up the US government’s original loans to GM and Chrysler or to offer further financial assistance.

National Automobile Dealers’ Association Chairman John McEleney – speaking after leading a dealer delegation in a meeting with the president’s task force – said the president’s automotive advisers were “on a steep learning curve”.

He said dealers were against the forced closures of dealerships that might be part of any industry restructure. He said the priority was freeing up credit, especially floor-plan financing.

“That’s one of the critical problems, if not the most critical, for dealers right now,” he said in an interview with Automotive News. The sales result in February was worse than any analyst forecast, translating into an annual running rate of just 9.05 million units – the second lowest since statistics started in 1975.

The annualised running rate in January was 9.8 million, which was also below the worst-case scenarios GM and Chrysler used in the restructuring plans they presented to congress in support of their applications for financial assistance.

Ford has already indicated that it has enough liquidity to survive without Government loans even if total US sales for 2009 drop to 8.9 million.

February was the third consecutive month in which sales fell by more than 35 per cent compared to the previous corresponding month.

GM was hurt by a 75 per cent drop in sales to fleet buyers, while Ford was hurt by a 55.1 per cent drop in sales of its best selling vehicle, the F150 pick-up.

Subaru and Hyundai were the only companies to post increased sales for the month.

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