Posted by: David Kiley on February 27, 2009
Ford Motor Co. said Friday that auto industry sales would be at an annualized selling rate of just around 9 million in February when it and other automakers report monthly sales on Tuesday.
Moreover, said Ford sales analysis chief George Pipas, Ford is expected to end its four month run of increased share of retail sales. Pipas said Ford, which was the only Detroit automaker to increase share in the fourth quarter amidst plummeting industry sales, was facing a tough comparison to last February, which was one of Ford’s best months of the year, as well as increased incentive spending by Japanese and Korean automakers, as well as Chrysler.
Auto sales fell 37 percent overall from a year earlier. The annualized rate, a key measure for economists, fell to about 9.57 million vehicles, the lowest monthly rate since 1982.
Ford’s Pipas said the company is still predicting a second half bounce for auto sales, but that the company doesn’t know yet how low sales are likely to fall between now and this summer.
Jesse Toprak, Edmunds.com’s executive director of industry analysis, noted that “volatility in the marketplace” has been devastating to consumer confidence and is “hampering any economic recovery.” Toprak said the seasonally adjusted annual rate (SAAR) for new-vehicle sales stabilized over the past four months but is expected to have declined in February to 9.3 million, from 9.6 million in January.
Ford, whose estimate for February sales is below that of Edmunds, cut the lower end of its 2009 U.S. auto industry sales forecast to 10.5 million vehicles, but said that it had sufficient liquidity to complete its turnaround plan without seeking government emergency support even if sales fell much steeper than that. The company is nevertheless seeking another round of employee buyouts to reduce payroll costs.
So far, Ford is not seeking government loans as GM and Chrysler have. And the automaker is on a mission to keep away from the loan window except for those being funded by the Department of Energy to help offset investments Ford has sought a $9 billion line of credit that it hopes it doesn’t have to tap. The automakers also told the Senate last December that if sales were at 10.5 million this year, 11.0 million in 2010 and 12 million in 2011, its worst-case scenario, that it would up its funding request to $13 billion.
Some analysts believe falling consumer confidence and delayed impact of most of President Obama’s stimulus package will too much of a drain on Ford’s cash for it to stay away from the Federal credit lines. But only time and the economy will tell.