Fresh troubles for US car giants

Firms have been offering deep discounts to entice buyers

Top US carmakers Ford, GM and Chrysler have reported domestic sales for August considerably below the same period one year ago.

Ford's sales were 26% lower than 2007 and it warned that conditions would get worse in the second half of 2008.

Chrysler's sales were down 34% while GM saw a 20% drop, although it performed 31% better than in July.

The tough economic climate has also affected foreign carmarkers, with Toyota sales dropping more than 9%.

'More challenging'

The combination of rocketing gasoline prices and growing job insecurity has made US consumers increasingly reluctant to make big purchases.

Carmakers have tried to stimulate interest by extending to all customers the generous discounts usually available only to employees.

But this appears to have had little impact, with the big three carmakers all suffering double digit falls in sales.

We expect the second half of 2008 will be more challenging than the first half Jim Farley, Ford

Ford reacted by further lowering production targets for the rest of 2008, meaning it will manufacture 50,000 fewer vehicles.

"We expect the second half of 2008 will be more challenging than the first half as weak economic conditions and the consumer credit crunch continue," said, Jim Farley, group vice-president for marketing.

But GM said the improvement on July's figures suggested that the market may just have bottomed out.

"We are very encouraged by what we saw in August," said Mark LaNeve, vice-president of North American sales. "It gives us reason to think that we are starting to pull our way out of this."

Ford, GM and Chrysler were caught flat-footed when US consumers began switching en masse to smaller, more fuel efficient vehicles.

They have reacted by radically restructuring their operations, closing plants and laying off thousands of workers.

"The industry is changing rapidly in terms of what vehicles and features customers want," said Chrysler's president, Jim Press.

Nissan emerged as the big winner among leading carmakers in August.

It enjoyed a combined 13.6% increase in vehicle sales in the US. Increased truck sales accounted for the bulk of the rise.

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