China Now Buys More Cars than America

How lousy are car sales? Consider that for the first time ever U.S. vehicle sales fell below China’s.

January U.S. vehicle sales fell to 656,976 vehicles–the lowest monthly sales figure since December 1981. Chrysler’s sales fell by 55% and Ford (F) fared the “best” of the Big 3 with a 40.2% sales decline. GM‘s (GM) sales fell 48.9%, despite GMAC being reclassified as a bank.

The sales slide has led companies to slash production even further. For example, GM’s North American output plunged 78% to only 65,000 vehicles last month. GM’s output is scheduled to be reduced by 57%. The ripple effects are being felt everywhere. Last year, over 40 car-industry suppliers filed for Chapter 11. The remaining suppliers are now asking for $25.5 billion in aid in order to survive.

Congressional leaders and industry allies met with the Obama administration regarding the appointment a “car czar.” Even though no car czar has been appointed yet, Chrysler and GM have been in daily talks with Obama administration officials, including economic adviser Larry Summers, about issues related to the loans they’ve already received. The Treasury Department is reported to be consulting with several bankruptcy and restructuring experts on how to best approach the automakers, including whether to help provide financing for a Chapter 11 filing.

We’ll see what happens over the next few weeks. In PortfolioGrader Pro, I rate Ford as a Hold and General Motors as a Sell.

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