AUTOSHOW-UPDATE 1-AutoNation cuts new vehicle orders by 60 pct

By Poornima Gupta

DETROIT, Jan 11 (Reuters) - AutoNation Inc (AN.N), the largest public car dealership group, has scaled back its orders for new vehicles from automakers by 60 percent this month as weak demand has increased inventories of unsold vehicles, Chief Executive Mike Jackson said on Sunday.

"Inventory is high for everyone," Jackson told Reuters in an interview on the sidelines of the Detroit Auto Show. "Orders have been scaled back dramatically .... have been scaled back 60 percent for January."

Jackson said the plunge in U.S. sales has caused cars and trucks to pile up on dealer lots and he does not expect any improvement in demand during the first quarter.

"You may see some signs of life by end of March," he said.

Jackson said the U.S. auto industry was at "depression level sales" at the current annual sales rate of about 10 million units.

The poor sales environment was affecting the mood at the Detroit auto show, Jackson said. "I have seen a better mood at funerals," he told Reuters TV.

Economic uncertainty was the key theme at the auto show media preview that opened Sunday as the battered industry shelved the glitz to save precious marketing dollars and braced for another rough ride in 2009.

U.S. auto sales fell 18 percent to about 13.2 million vehicles in 2008 from the prior year, battered by the downturn in the economy and most automakers expect sales to decline from there in 2009. The rate has hovered just above 10 million on an annualized basis in the last couple of months.

Jackson said he expects a gradual improvement in the U.S. market in the second half of the year, given the massive stimulus package being considered by the incoming Barack Obama administration.

"In 2010, you could be back between 13 million and 14 million units," he said.

Jackson said lack of credit remained a key issue for consumers.

"If credit was not an issue, we could be running at a SAAR of 12 million and 13 million (units)," he said, adding that the restoration of credit availability is critical for the improvement in auto demand.

Fort Lauderdale, Florida-based AutoNation owns and operates 321 vehicle franchises in 15 states with a range of U.S., Asian and European automobile brands.

(Editing by Bernard Orr)