Ford on top as GM, Chrysler fall down

Ford's mid-sized Fusion has helped limit its sales losses recently.

The latest sales figures from General Motors and Chrysler, two historic automakers being propped up by the US government, suggest that their bankruptcies have made consumers wary of buying their cars.

In June, one of the most tumultuous months ever for the industry, Chrysler posted a 44 per cent collapse in US sales, compared with the same month a year ago. General Motors, whose brands include GMC, Chevrolet and Cadillac, posted a 34 per cent decline. Both were weaker than expected.

GM had been running a sheepish ad campaign throughout the month drawing attention to its bankruptcy, under the slogan "reinvention is the only way we can fix this".

Rival Ford, which mortgaged most of its assets to raise cash in 2006, before the credit crisis made access to cheap debt much harder, has not needed to take money from the government and has averted bankruptcy - something that has helped it build market share this year.

New products, such as the mid-size Ford Fusion and the company's hybrids, helped limit the year-on-year decline in sales to 11 per cent, a better figure than expected.

Analysts had been struggling to predict GM and Chrysler sales for June. Both companies are culling dealerships across the US, while GM is axing less successful brands entirely.

Sergio Marchionne, the Fiat boss installed last month as Chrysler chief executive after a government-sponsored alliance between the two car makers, said the drastic moves are starting to reduce the rate at which Chrysler is burning through cash.

GM's own restructuring plan is being examined by a bankruptcy court in New York this week. The government has stepped up its pressure for a quick approval of the plan, which involves selling the company's best assets to a "new GM" that will be majority-owned by the US taxpayer.

Some of GM's bondholders, who will receive less than 10 per cent of the new company in return for giving up their cash claims, are opposing the sale.

A senior Obama administration official, Harry Wilson from the US Treasury's auto task force, told the court yesterday that the government has "no intention to further fund this company if the sale order is not entered by 10 July".

- THE INDEPENDENT