General Motors Corp. said it delivered 170,585 vehicles to U.S. dealers in October, down 45% compared to a year prior. Its domestic rivals faired almost as poorly, with Ford Motor Co. sales down 30% year-over-year and sales at Chrysler LLC, according to CNBC, off 37%.
The automakers had telegraphed that they expected a sales decline as the credit crunch and a slowing economy kept consumers away from the dealer showrooms. Indeed even healthier foreign companies are reporting drops, with Honda Motor Co. Ltd. and Toyota Motor Corp. saying that their U.S. vehicle sales declined by 25% and 23% last month, respectively.
For the U.S. automakers, already in the middle of restructurings and not expected to generate profits until 2009 at the earliest, the worse-than-expected sales drop of recent months have called into question whether they have enough cash to weather the storm. Those fears have prompted General Motors to seek a deal first with Ford and more recently with Chrysler, though the talks have been put on hold while GM and Chrysler private equity owner Cerberus Capital Management LP seek upwards of $10 billion in fresh capital needed to buy out workers and provide the merged company with a comfortable cash cushion.
Poor numbers could actually boost GM's case for government funding. The automaker has argued to lawmakers that whatever job loss would be necessary as part of a deal would be better than the wholesale losses that would come if Chrysler was to fail. With every dire month, the prospect of one of the Big Three going under seemingly becomes a bit more realistic. - Lou Whiteman
See TheDeal.com story updating the GM/Chrysler talks
See Dealwatch: Autos
Lou Whiteman is The Deal's senior airline and automotive reporter.
Comments
Automakers on Monday reported dismal sales figures for the month of October, providing concrete data about a sales decline that has put recoveries in jeopardy and has sent some companies scrambling to find partners. 
Too much of consumers' money is going to pay interest. Government legislation, the Fed, and the banks have stripped consumers of their wealth. The economy will not recover until consumers do. Lowering the interest rate and throwing money at banks and other corporations is not going to fix the problem. It is only going to make matter worse when the resulting inflation sets in. Banks are going to have to take their lumps along with everyone else. To reduce the severity, banks need to lower interest rates on credit cards, mortgages, personal loans, and lines of credit. Congress also needs to stop fooling around with things that stimulate the economy like tax credits for renewables and they need to stop bringing cheap foreign labor into the country.
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