October 1, 2008 / 12:48 PM / 11 years ago

UPDATE 1-Auto stocks sink as credit crunch hits car buyers

(updates with Ford comments, French data, new share prices)

LONDON, Oct 1 (Reuters) - Shares in European automakers fell sharply on Wednesday as signs consumers are struggling to raise loans to buy cars fed into a market spooked by concerns about earnings targets at Daimler (DAIGn.DE).

The Stuttgart-based company’s share price extended early declines after it denied talk of a profit warning, while data from German rival Porsche (PSHG_p.DE) suggested even the luxury end of the market is no longer immune from the global economic downturn.

Concerns about a consumer funding logjam were highlighted by leading industry participants on both sides of the Atlantic.

Roelant de Waard, chairman of Ford UK, told Reuters on Wednesday vehicle sales are likely to fall year-on-year in Britain in 2008 and 2009 unless something is done to improve the availability of consumer credit.

On Tuesday, the head of top U.S. dealership AutoNation Inc (AN.N) said even prime borrowers looking to buy cars and trucks were failing to secure loans, impacting sales volumes in the world’s biggest car market by up to 20 percent.

“The banks are looking for every excuse possible to say no and they are saying no to good customers ... and it’s having a significant impact on volume in the automobile industry,” Mike Jackson told business news channel CNBC. [ID:nN30469434].

“The statement from AutoNation adds to pressure which could already be seen yesterday from a broker note from Merrill Lynch on Daimler and BMW (BMWG.DE) that also addressed credit-related problems for carmakers,” a Frankfurt-based trader said.

U.S. vehicle sales data due on Wednesday are expected to show unit volumes declined in September to close to a 15-year low. [ID:nN30450222].

The Bush administration acknowledged the problems facing the industry on Tuesday, signing into law a $25 billion package of low-cost loans to help General Motors Corp (GM.N), Ford Motor Co (F.N) and Chrysler LLC produce more fuel-efficient vehicles. [ID:nL182158].

In Europe, auto stocks dominated the list of blue-chip decliners, led by Daimler, which continued to fall despite denying rumours of a profit warning, saying it would give its next outlook with third-quarter results on Oct. 23. [ID:nWEA1476]

At 1205 GMT, Daimler shares were down 6.9 percent at 32.94 euros. Among other leading European car makers, Volkswagen (VOWG.DE) fell 3.4 percent and Fiat 3.8 percent.

Renault (RENA.PA), down 4.3 percent, and Peugeot (PEUP.PA), down 3.62 percent, trimmed losses after data from French carmakers association CCFA showed car sales rose 8.4 percent in September from the previous year, defying the downturn in the rest of Europe thanks to consumer tax breaks. [ID:nL1722473].

In Spain, car sales fell 32 percent in September, marking the fifth straight month of decline, data showed on Wednesday.

Among second-line auto shares, Porsche was down 10.5 percent after the sports car specialist reported a modest 1.2 percent rise in unit sales in the year to July and declined to give a forecast for the current year, pledging to adjust its production to meet a possible slowdown in demand. [ID:nWEA1458].

Further along the supply chain, tyre manufacturers’ share prices were also hit, with Michelin (MICP.PA) down 5.9 percent and Continental AG (CONG.DE) losing 3.9 percent.

Reporting by David Bailey and Tyler Sitte. Writing by John Stonestreet. Editing by Quentin Bryar and Jon Loades-Carter

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