U.S. auto slump seen rolling through November

By Soyoung Kim and David Bailey

DETROIT (Reuters) - Undercut by tight credit and a weak economy, November U.S. auto sales are expected to have dropped by some 30 percent from a year earlier, extending a year-long downturn that has pushed Detroit-based automakers to the brink of failure.

U.S. automakers, struggling to conserve cash as they battle for survival, are poised to report sales declines of about 35 percent. Japanese automakers such as Toyota Motor Corp (7203.T) are also certain to have been hit by collapsing demand in the world's biggest vehicle market.

November sales are due for release on Tuesday, the deadline for U.S. automakers to submit turnaround plans requested by Congress for considering $25 billion in government loans for the cash-strapped industry.

General Motors Corp (GM.N) and Chrysler LLC CBS.UL have both warned it would be difficult to survive without urgent government funding.

Honda Motor Co (7267.T) Executive Vice President Koichi Kondo said U.S. auto demand looked "bad" again in November, adding Honda's sales decline would be only slightly narrower than the 28 percent drop posted in October.

"There's a bottom somewhere but I'd like to know where it is," Kondo told Reuters in an interview on Friday.

Analysts expect U.S. light vehicle sales to be down from 28 percent to 34 percent in November from a year earlier.

The seasonally adjusted annual rate of sales, a key indicator tracked by analysts and the auto industry, is likely to come in between 10.5 million and 11.5 million vehicles, down from the 16.1 million-units rate recorded in November 2007.

The year-to-year decline in November sales would mark the 13th consecutive monthly drop in U.S. auto sales, extending a slump expected to be running at least through 2009.

Analysts said the only modestly encouraging aspect to November sales is likely to be that the annualized sales rate will have come in a bit higher from the 10.6-million rate for October, bolstered by aggressive discounting by the automakers. October's result was the lowest sales level in 25 years.

Toyota extended a zero-financing offer it had launched in October during November. Nissan Motor Co (7201.T) began its own zero-percent offer and GM rolled out a "Red Tag" sale with lower vehicle prices and cash-back offers.

ALL EYES ON BAILOUT

The November sales data will be watched in Washington, where U.S. lawmakers are scheduled to reconvene to review the restructuring plans submitted by the U.S. automakers and consider their request for a $25 billion rescue package.

Analysts have said some form of government assistance is more likely than not amid growing concern about the risks to the U.S. economy from failing to prevent a collapse of one of the Detroit automakers.

On the other hand, the high-profile debate about the risk of a bankruptcy by GM or Chrysler could have hurt their sales in November, JPMorgan analyst Himanshu Patel said.