[Zef]

Detroit car sales set to be ‘worst since 1990s’
By John Reed in London

Published: June 30 2008 22:30 | Last updated: June 30 2008 22:30

June car sales data, due out on Tuesday, are expected to show the US auto market heading for its worst year in more than a decade.

The figures could also mark a milestone for Detroit’s struggling producers if they show Toyota outselling General Motors in its home market for the first time, although sales incentives recently introduced by GM could yet keep it ahead of its rival.

EDITOR’S CHOICE
Detroit’s Big Three keep eyes on cash - Jul-02Downsizing SUV drivers shift Mini sales up a gear - Jul-02Toyota stall keeps GM atop US sales rankings - Jul-01Chrysler plant closing reflects shift in demand - Jun-30Cerberus up for Chrysler challenge - Jun-19Small cars prove next big thing - Jun-20GM’s shares on Monday hit their lowest level in half a century as investors sold them ahead of Tuesday’s sales results.

As oil prices rise, household budgets are squeezed and Americans stop buying large vehicles.

Most forecasters and equity analysts expect annualised light-vehicle sales rates to reach barely 13m for June in the world’s largest car market, where last year sales exceeded 16m units.

“It’s not going to be pretty,” said Michael Robinet, vice-president for forecasting with CSM Worldwide.

“The consumer right now is undecided as to where fuel prices will go, whether their personal living costs will rise and, if so, by how much,” he added.

Credit Suisse on Monday predicted that the sales figures could be the “worst we’ve seen since the early 1990s recession, perhaps as low as the 12m range”.

The bank said it thought the number was more likely to be higher, but noted that even its forecast of 13.1m to 13.4m would still amount to an “unmitigated disaster by most measures”, given the rise in America’s population and vehicles that have been on the road since the early 1990s.

Most carmakers and forecasters entered 2008 with predictions that after a slow start, car sales would accelerate as Americans cashed their tax rebate cheques and the economy edged away from recession.

Soaring fuel prices have since precipitated a collapse in the market for pick-up trucks and sports utility vehicles, in which GM, Ford Motor and Chrysler are market leaders.

The rout is already being felt in America’s used-car market, where some dealers will no longer buy trucks.

Detroit’s three carmakers are shuttering capacity at large-vehicle plants and speeding up their small car programmes .