U.S. auto sales in February fell to a worse-than-expected level, so low that the U.S. Treasury will face pressure to give more money to General Motors Corp. and Chrysler LLC or let them fail, analysts say.
Industry sales plummeted 41 percent last month to a 9.1 million-vehicle annual rate, the lowest since December 1981, according to Autodata Corp. GM, surviving with the aid of government loans, reported a 53 percent drop.
At that level, nearly every automaker is struggling. GM and Chrysler are requesting $21.6 billion in additional loans from the U.S. government and said they likely will need it all. Additional government aid to keep the automakers out of bankruptcy is making less sense, because it has become difficult to project an end to the sales declines, said Stephen Spivey, an automotive analyst at Frost & Sullivan in San Antonio.
“If it stays contracted at this rate for a significant period of time, the bridge loans are being recalled and they are going into bankruptcy,” Spivey said Tuesday in an interview after the sales results.
The government has committed $17.4 billion to GM and Chrysler. Both companies face a March 31 deadline to accomplish a restructuring plan that includes concessions from labor and lenders, or the loans can be called by the government. Mike Ramsey and Alan Ohnsman, Bloomberg News
