Car sales continued to plummet last month, but the industry found surprising encouragement in the dismal performance, writes KEN BENSINGER.

CAR SALES continued their dark and cloudy run in March, but this did not stop carmakers casting about for silver linings.

Sales of new cars and light trucks in the US last month declined 37 per cent from the same period last year, according to Autodata. The dismal performance marked the 15th consecutive month of declines for the industry.

Yet, desperate for any good news, executives at major carmakers found surprising encouragement in the numbers.

“I think we’re seeing the first signs of a brightening in outlook for the industry,” said Mike DiGiovanni, chief sales analyst at General Motors (GM), which reported a 45 per cent sales decline for the month and on Monday learned that US president Barack Obama found its restructuring plan inadequate.

“Despite the difficult conditions, we are seeing some signs for optimism,” said Bob Carter, group vice-president at Toyota, whose sales declined 39 per cent. At Chrysler, which also got stern treatment from the president, spirits were relatively high despite a 39 per cent sales drop in March and 46 per cent so far in 2009. “We feel we’re making the progress we’ve been forecasting,” said company vice-chairman Jim Press.

Collectively, it was a curious talking point from an industry that, even after a slight uptick in March, is on pace to sell only 9.89 million cars this year – 25 per cent fewer than an already weak 2008. Ford Motor’s sales were down 41 per cent, while Honda Motor’s fell 36 per cent. Nissan, the last of the six largest manufacturers that sell in the US, reported a 38 per cent drop.

No manufacturer reported a sales increase for the month, although Kia Motors, Hyundai Motor and Subaru all held their declines to single digits.

Much of it has to do with context, analysts say. “We have a depression level of car sales in this country,” said David Cole, chairman of the US Centre for Automotive Research.

“Consumers have been barraged by bad news about the auto industry and need a reason to find confidence.”

GM has 60 days, and Chrysler 30, to prove to the Obama administration that they can get on track financially. If not, they face being cut off from further federal aid and possibly having to file for bankruptcy. Combined, the two carmakers have borrowed $17.4 billion (€12.94 billion) from taxpayers.

While other carmakers are not in the same bind as GM, the tough economy has been hitting their sales. The tide of bad news about the car industry seems to have kept buyers of all stripes on the sidelines. “These are not ordinary times,” said George Pipas, chief sales analyst at Ford, which was perhaps most guarded carmaker in its assessment of the market.

“We think there might be some improvement out there, but we’re at best cautiously optimistic.”

In their rounds of calls to analysts and reporters this week, the car companies predicted that a series of stimuli spelled better things to come. The industry applauded a plan floated by Obama on Monday to increase sales by paying consumers to turn in aging cars for new ones. GM went one step further, suggesting the administration should look into sales tax rebates.

On Tuesday, Ford and GM announced incentive programmes that guarantee car payments for purchasers who lose their jobs.

A similar programme was launched by Hyundai in January, with positive results. Last month, Hyundai’s sales fell only 4.8 per cent. For the first three months of the year, its US sales are up half a per cent compared with an overall industry decline of 38 per cent.

Gmac, the financing arm for GM, said on Wednesday that it had approved more loans to borrowers with lower credit scores in March than in previous months, and that it would tentatively begin financing loans to subprime carbuyers this month.

Scarcity of consumer credit has been a serious problem in the industry over the past six months, particularly for US carmakers, which have dropped automotive leasing altogether.

Obama’s plans for Chrysler require it to reach a deal to merge with Italian carmaker Fiat by May to receive more funding from Washington.

Chrysler’s Press managed to find encouragement in Obama’s assessment that the company could not survive on its own.

"The administration's announcement gave Chrysler a clear path to finalise plans for the future," he said. "Our goal is to translate the confidence to our customers."– ( LA Times- Washington Postservice)