April 1, 2009 / 10:26 AM / 11 years ago

Grim U.S. car sales seen, but incentives help in Europe

PARIS/DETROIT (Reuters) - The U.S. auto industry struggled to restructure and added deals to get buyers back into their showrooms, hoping to mimic the incentive-driven successes their European rivals started to see during March.

A truck loaded with new Renault cars leaves the Revoz factory in Novo Mesto March 24, 2009. REUTERS/Srdjan Zivulovic

The embattled U.S. car companies were set to release March sales figures on Wednesday, starting about midday, and they are expected to fall to 40-year lows. Fears about the sales sent auto shares lower in early New York Stock Exchange trade.

Car markets in Europe reported tentative shoots of recovery on Wednesday but Honda (7267.T) moved to further cut U.S. output as General Motors Corp (GM.N) faced a rising bankruptcy risk and Chrysler LLC raced to secure its survival.

Car sales in Asia tumbled.

But government incentives in Europe encouraging cash-strapped consumers to ditch old cars for new models began to bear fruit.

Sales rose strongly in France and Italy and the rate of decline slowed in Spain, while in Germany government officials said more than 860,000 car owners had signed up for a 2,500-euro new-for-old “scrappage” bonus.

GM’s shares continued to struggle after its new chief executive said on Tuesday that there was a rising chance it could file for bankruptcy by June.

The crisis-hit carmaker denied a Financial Times report it had approached the British government to discuss a 600 million pound ($859 million) aid package for its Vauxhall brand.

GMAC Financial Services said it will lower vehicle financing costs and resume making loans to subprime borrowers, as it tries to jump-start sales.

GMAC said the moves are expected to make at least $5 billion of credit available to customers over the next 60 days and eased a variety of fees and payments imposed on dealers.

General Motors shares were down 10 percent in New York Stock Exchange trade at $1.74 and Ford Motor Co (F.N) shares were down 4 percent at $2.53.


In Paris, Renault (RENA.PA) said overall registrations in the French market rose 8.1 percent in March, while its own sales were up 12.8 percent, helped by a scrapping incentive.

Government incentives for the purchase of new, less polluting cars also boosted the industry in Italy.

“Registrations showed a significant recovery” in March, said research group Promotor ahead of publication of the figures at 12 p.m. EDT.

In Spain, the fall in car sales eased to 38.7 percent in March after a 48.8 percent drop in February, also partly due to a government stimulus plan, carmakers association Anfac said.

French car equipment supplier Faurecia’s (EPED.PA) CEO told a newspaper that carmakers had stopped cutting sales and output forecasts, although he warned that the industry’s recovery would be long and gradual.

With U.S. auto sales still at multi-decade lows, the picture from Asia was equally gloomy.

South Korea’s five automakers in March posted an 18.8 percent drop in sales to 402,563 vehicles, with exports down 19.9 percent. Hyundai’s (005380.KS) registrations fell 9.8 percent.

In Japan, auto sales slumped 25.3 percent.

However, Honda shares rose after the automaker said it would cut production in the U.S. by temporarily shutting factories, and would cut pay for workers.

Reporting by John Crawley, Emily Chasan, Walden Siew, David Bailey, Marcel Michelson, Matthias Blamont, Kevin Krolicki, Soyoung Kim; editing by Patrick Fitzgibbons and Dave Zimmerman

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