No Christmas Gift For US Automakers Seen In Sales

Financially strained consumers remain reluctant to purchase a big-ticket item such as a car at a time of massive job cuts.

General Motors Corp and Chrysler may have won a $17.4 billion gift from the U.S. government a week before Christmas, but at their showrooms, barely a creature was stirring.

Financially strained consumers remain reluctant to purchase a big-ticket item such as a car at a time of massive job cuts and the near-absence of vehicle financing.

Reflecting the weak expectations for December sales and lingering worries about a failure, shares of GM dropped 15 percent, or 54 cents, to $2.98 on the New York Stock Exchange.

Shares of Ford Motor Co <F.N> were also down 15 percent to $2.18.

Despite last week's emergency federal bailout of GM and Chrysler, analysts and consumers remain worried about the possibility of bankruptcy at both automakers as sales continue to sink.

"As questions about the economy remain unanswered, many consumers are reluctant to respond to the incredibly generous deals available on new cars," said Jesse Toprak, executive director of analysis at industry tracking firm Edmunds.com.

Toprak expects U.S. industrywide auto sales to drop more than 38 percent in December from a year earlier, ending the year on a dismal note.

Based on the seasonally adjusted sales rate closely tracked by analysts, December auto sales are expected to come in at 9.8 million units. That would represent a further decline from 10.2 million units in November, which marked 26-year lows. In October, the rate was 10.6 million.

Ford's Americas chief Mark Fields said last week that U.S. auto sales through the first half of the December was "about the same level" as October and November.

Fields said typically most of the vehicle sales in December come in at the last few days of the month.

Chrysler, seen as the weakest of Detroit's three automakers, is expected to lead the industry decline with a more than 45 percent plunge in December sales, according to Edmunds.com, while GM sales are seen down 39 percent and Ford sales down 34 percent.

Toyota Motor Corp, Honda Motor Co and Nissan Motor Co are all expected to report declines of about 40 percent.

While no one would be spared in the pain, sales for GM and Chrysler would be read with keen interest because the automakers must show the government by the end of March they have a good chance of generating cash as a condition of the $17.4 billion bailout.

"We continue to see little equity value in the restructured GM," BarClays Capital analyst Brian Johnson said.

"A greater decline in sales raises the possibility for additional funding needs," Johnson added.