Chrysler sees "big" drop in March U.S. sales

NEW YORK (Reuters) - Chrysler LLC expects to post a "big" decline in March U.S. sales compared with a year earlier, reflecting the automaker's decision to pull back from less profitable deals for car rental agencies, Chrysler sales chief Jim Press said on Wednesday.

Press was speaking to reporters at an event with other senior Chrysler executives on the sidelines of the New York auto show. Now controlled by Cerberus Capital Management CBS.UL, Chrysler has posted a 13 percent drop in U.S. sales in January and February.

"We will see big declines versus last year driven by our planned reduction of fleet sales," Press said. U.S. automakers have been cutting back low-margin sales to big buyers such as governments and car rental agencies in an effort to improve profitability and boost the resale value of their vehicles.

Press declined to comment specifically on how the company's retail sales had performed so far through March, only saying that they were "on plan."

Higher gasoline prices, a weak housing market and a credit squeeze have hurt consumer confidence, reducing vehicle sales.

Industrywide U.S. auto sales fell 2.5 percent to 16.15 million vehicles in 2007, the lowest level in a decade. Analysts and industry executives expect further declines in 2008, especially in the first half of the year.

J.D. Power and Associates on Tuesday revised its forecast for 2008 U.S. light vehicle sales to 14.95 million vehicles, down from its earlier estimate for 15.7 million.

Press said: "It's a challenging economy. The market is facing choppy waters. The entire industry is facing headwinds."

Chrysler Chief Executive Bob Nardelli said it is no tougher for Chrysler than for other major automakers. "It's raining on all sides of the street," he said. Nardelli said the automaker has the ability to cut production should sales fall further than expected.

Separately, Tom LaSorda, who oversees the automaker's production activities, said he was "optimistic" Chrysler could meet its target for reducing its number of U.S. factory workers through a program of buyouts and early retirement offers.

Chrysler has said it aims to reduce by 8,000 to 10,000 its 44,000 member U.S. blue-collar work force represented by the United Auto Workers union as part of its restructuring efforts.

(Reporting by Jui Chakravorty and Kevin Krolicki, editing by Gerald E. McCormick)