At that level, nearly every automaker is struggling and GM and Chrysler, which are requesting US$21.6 billion in additional loans from the US government, said they likely would need it all. Additional government aid to keep the automakers out of bankruptcy is making less sense, because it has become difficult to project an end to the sales declines, said Stephen Spivey, an automotive analyst at Frost & Sullivan in San Antonio.

President Barack Obama’s automotive task force has been meeting with automakers, union officials and auto-parts makers about how to address the collapsing industry. The government already has committed $17.4 billion to GM and Chrysler. Both companies are working on a March 31 deadline to accomplish a restructuring plan that includes concessions from labor and lenders, or the loans can be called by the government.

The sales rate in February, below the 9.5 million average of 27 analysts’ and economists’ estimates compiled by Bloomberg, “implies the maximum amount of government aid – if not more – will be necessary” for GM and Chrysler, said Rebecca Lindland, an analyst at IHS Global Insight based in Massachusetts.

Unsustainable levels

“These are obviously unsustainable levels which are causing almost every major auto manufacturer across the world to look for government aid,” Michael DiGiovanni, GM’s chief sales analyst, said on a conference call Tuesday. He said February is the low point in the market.

Toyota Motor Corp. and other automakers previously seen as having solid financial footing cannot sustain a selling rate as low as February’s for a year or longer without laying off workers or taking more dramatic steps, Spivey said.

The 40 percent February US decline for Toyota, the world’s largest automaker, was its biggest ever. Toyota, forecasting its first loss in 59 years, may ask the Japanese government for 200 billion yen ($2 billion) in loans for its credit unit as private financing has become too expensive, public broadcaster NHK reported Tuesday, without naming its source.

Production cuts, too

Sales tumbled 48 percent for Ford Motor Co., 44 percent for Chrysler, 38 percent for Honda Motor Co. and 37 percent for Nissan Motor Co. GM said it plans to build 34 percent fewer vehicles in North America next quarter, and Ford announced a 38 percent reduction from a year earlier.

Chrysler has scaled its factories to meet the lower demand and can operate at the low sales rate, Ron Kolka, the chief financial officer of the company, said in a call with reporters Tuesday. Chrysler has a $4 billion loan from the government and has asked for $5 billion more.

Source: Bloomberg