GM sales data illustrate need for Lordstown cuts

GM’s overall sales plunged 49 percent last month.

STAFF/WIRE REPORT

General Motors released sales numbers Tuesday that show why it shut down its Lordstown factory for all of January and is cutting back to one shift of production.

GM sold 5,191 Chevrolet Cobalts in the U.S. in January, down from 17,310 sales in the same month of 2008. Last month was the car’s worst month since the early days of its launch at the Lordstown plant in late 2005.

When stock markets crashed and credit markets tightened last fall, Cobalt sales dipped under 7,000. They bounced back in December with sales of nearly 13,000.

GM indicated recently, however, that it expects a prolonged sales slump by cutting production at Lordstown and laying off 2,800 of the plant’s 4,200 workers.

Sales of the Cobalt’s twin, the Pontiac G5, also were down last month. GM sold 767 G5s, which was its worst total since the car’s first sales month in July 2006.

Overall, GM’s U.S. vehicle sales plunged 49 percent in January, while Ford’s sales dropped 40 percent and Chrysler’s fell 55 percent. The companies said lower sales to fleet buyers such as rental car companies weighed down the results.

GM said its fleet sales fell 80 percent to just over 13,000 vehicles in January, marking their lowest sales level since 1975. GM’s retail sales fell 38 percent.

Toyota’s sales dropped 32 percent for the month, and Honda’s sales fell 28 percent, putting the overall industry on track for its fourth straight month in which U.S. sales plunged 30 percent or more.

But Subaru bucked the trend of declines for a second month in a row, posting an 8 percent sales increase, and Hyundai said its sales jumped 14 percent.

Hyundai credited its increase to its offer to cover a new vehicle’s depreciation if customers return a car within 12 months because they are unable to make the payments.

“This program gets to the root cause of today’s economic concerns — fear of job loss,” Hyundai regional general manager Peter DiPersia said in a statement.

The industry’s annualized sales rate for the month could drop below 10 million for the first time in more than 26 years, said Steven Landry, Chrysler’s sales chief. According to Ward’s AutoInfoBank, the last month in which the seasonally adjusted annual sales rate dropped below 10 million was August 1982, when it hit 9.9 million as the nation was mired in a recession.

Domestic and foreign automakers have been struggling as unemployment rises, consumer confidence weakens and many people have a tougher time getting loans. General Motors Corp. and Chrysler LLC have received $13.4 billion in federal loans to stay afloat, and they hope to get more after they submit a viability plan to the government by Feb. 17. Ford Motor Co. has said it does not plan to use government aid.

GM said earlier this month it is planning its turnaround under the assumption the entire industry will sell 10.5 million new vehicles in the U.S. this year. Chrysler has said it’s planning on 11.1 million units, and Ford last week reduced its forecast to a range between 11.5 million and 12.5 million. But few people were expecting the automakers to start 2009 at such a pace.