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November auto sales fall to 26-year low

NEW YORK - U.S. light vehicle sales at General Motors and Chrysler plunged more than 40 percent in November, while Ford's sales dropped 31 percent, battered by an economic storm that has sent consumer demand for new vehicles to the lowest level in more than 26 years.

GM's sales fell 41 percent, while Chrysler's dropped 47 percent. Their overseas rivals posted abysmal results Tuesday as well. Toyota's November U.S. sales tumbled 34 percent, while Nissan's dropped 42 percent and Honda's fell 32 percent.

Automakers sold 746,789 vehicles in the U.S. in November. The seasonally adjusted annual sales rate for the month was 10.18 million, compared with 16.07 million a year earlier. That's the lowest level since October 1982, according to Autodata Corp.

Like retailers of other big ticket items, automakers have taken a beating in recent months as worries about the economy and unemployment have prompted consumers to slash spending. At the same time, some people afraid that they won't qualify for credit or that it will be too costly have put purchases on hold.

On Monday, the National Bureau of Economic Research said the U.S. entered a recession in December 2007, much earlier than most predictions.

Many analysts had expected November sales to improve slightly from the previous month's 25-year low, noting that aggressive incentive spending and the plunge in gasoline prices may have put a floor under sales. But U.S. vehicle sales fell 11 percent from October, according to Autodata.

Chrysler LLC said its November sales decline included a 59 percent decrease in demand for cars and a 42 percent decline in truck sales. The Auburn Hills, Mich.-based automaker said the drops were partially a result of a 63 percent decline in fleet sales. Excluding such sales, Chrysler said its November sales fell 36 percent.

General Motors Corp. reported a 44 percent drop in demand for cars, while light truck sales dropped 39 percent.

Mike DiGiovanni, GM's executive director of global market analysis, blamed the Detroit automaker's sharp sales decline on the global economic crisis and the credit squeeze.

'What we are facing is not a General Motors problem; what we are facing is an industry problem,' DiGiovanni said in a conference call. 'We are seeing further deterioration in the industry into November.'

DiGiovanni said the U.S. auto industry was in a worse state of recession than the broader economy, 'and some might say bordering on a depression.'

Jim Farley, Ford Motor Co.'s group vice president of marketing, said he expects the industry to post continued year-over-year sales declines until at least the second half of 2009.

'We could see some strengthening in the second half of next year, or at least some stabilization, albeit at a much lower level,' Farley said in a conference call with analysts and reporters.

Farley said sales started the month at an improved rate but began skidding around mid-November, coinciding with the Detroit Three's presentation to Congress for $25 billion in loans. But he cautioned that numerous factors worked together to hobble sales.

Mark LaNeve, GM's vice president of North American sales, also acknowledged that attention on the proposed auto industry bailout likely had a negative affect on sales, though he said it was difficult to quantify.

Dearborn, Mich.-based Ford said light truck sales for its namesake brand, Lincoln and Mercury were off 29 percent compared with November 2007, while the three brands' car sales were down 32 percent.

But Ford said its market share grew in November, helped by a recovery in its pickup truck segment and demand for the Ford Fusion sedan. Sales of Ford's top selling F-Series pickups dropped 19 percent, significantly less than most of the automaker's other models, while sales of the Fusion fell 27 percent.

George Pipas, the automaker's top sales analyst, attributed that improvement in part to the sharp decline in gasoline prices and added the company will increase the proportion of its truck production early next year.

SideBar: GM says it needs $12B by late March

By Ken Thomas

The Associated Press

WASHINGTON - General Motors Corp. said Tuesday it needs $12 billion in government loans to keep operating, telling Congress in a bluntly worded report that its collapse could have 'severe, long-term consequences to the U.S. economy.'

GM said it would seek up to $18 billion from the government: $12 billion in loans, including $4 billion by the end of December, and a separate $6 billion line of credit in case market conditions worsen.

'Absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry,' GM said, contending its collapse would have 'a ripple effect that will have severe, long-term consequences to the U.S. economy.'

'There isn't a Plan B,' Chief Operating Officer Fritz Henderson said. 'Absent support, frankly, the company just can't fund its operations.' He said GM would need $10 billion to $12 billion by late March.

GM, along with Ford Motor Co. and Chrysler LLC, submitted detailed plans to Congress in hopes of winning support for at least $25 billion in loans to keep the battered U.S. auto industry afloat.

GM said it would take significant steps by 2012 to restructure, including the reduction of 20,000 to 30,000 workers, the cutting of nine plants and the slashing of 1,750 dealer locations.