Special Report: Global Financial Crisis    

    BEIJING, Jan. 13 -- Ford Motor Co, the second-largest U.S. automaker, may have to abandon its plan to forgo federal loans as the weakening economy threatens to drive domestic sales 10 percent lower than the company's forecast.

    Ford expects U.S. light-vehicle sales will reach 12.2 million units this year, almost two million more than the annualized sales rate over the last three months. Chrysler LLC predicts sales may reach 11 million, while General Motors Corp projected a range on Sunday of 10 million to 11 million.

Ford Motor Co. Chief Executive and President Alan Mulally (L), Executive Chairman Bill Ford (2nd L), President of the Americas Mark Fields and Group Vice President of Product Development Derrick Kuzak (R) pose next to the 2010 Taurus sedan during press days at the North American International Auto Show in Detroit, Michigan, Jan. 11, 2009. (Xinhua/Reuters Photo) Photo Gallery>>>

    "The market will not reach 12.2 million units" this year, "no way, no how", said John Wolkonowicz, an IHS Global Insight analyst. The Lexington, Massachusetts-based consulting firm trimmed its 2009 sales estimate last week to between 10 million and 10.5 million.

    Sales at that level would trigger the need for as much as 13 billion U.S. dollars in loans, Ford told Congress last month. That would undercut the company's attempt to win customers by portraying itself as Detroit's healthiest automaker, after GM and Chrysler both sought federal financial aid.

    The U.S. automakers and industry analysts agree that domestic sales will fall again this year after tumbling 18 percent in 2008 to 13.2 million units, short of the annual average of about 16 million over the past decade. The size of the plunge is the only dispute.

Workers remove the Ford logo signs from Al Long Ford auto dealership in Warren, Michigan Dec. 23, 2008. (Xinhua/Reuters Photo) Photo Gallery>>>

    Citigroup Global Markets Inc predicts 2009 U.S. sales will be 10.8 million, while Goldman, Sachs & Co projects an 11-million vehicle market.

    Unless world implodes

    Ford's "game plan is to keep going on our own" and not seek federal loans unless "the world implodes as we know it", Chairman William Clay Ford Jr told reporters on Sunday at the North American International Auto Show in Detroit.

    Promoting its strength versus domestic peers helped Ford boost market share late last year, as consumers avoided GM and Chrysler out of fear they might go bankrupt, according to a survey conducted by CNW Marketing Research of Bandon, Oregon.

    As GM and Chrysler teetered on the verge of financial collapse in late 2008, requesting federal aid as they burned through cash, Dearborn, Michigan-based Ford was able to maintain sufficient liquidity thanks to 23 billion dollars in private borrowing in late 2006. Ford is using the loans to pay for developing new models and shutting factories while weathering losses.

General Motors Chairman and Chief Executive Rick Wagoner speaks to the media during a news conference at GM world headquarters in Detroit, Michigan Dec. 19, 2008.  (Xinhua/Reuters Photo) Photo Gallery>>>

    The automaker is scrutinizing its forecast, Chief Financial Officer Lewis Booth said in an interview.

    The bad months

    "The longer the bad months continue, the more we wonder about when the recovery will happen," Booth said. "We look at it every month, and we will very quickly react to the reality."

    Under its scenario for a U.S. auto market of more than 12 million vehicles, Ford is seeking a line of credit of at least 9 billion dollars from the government as a financial backstop.

    "We're comfortable with where we are, but we have asked for a line of credit, just in case," Bill Ford told reporters on Sunday at the Detroit show.

    Ford's assumptions are based on the belief that President-elect Barack Obama's economic stimulus efforts will begin bearing fruit by the second half of the year, Booth said.

    Emily Kolinski Morris, Ford's senior U.S. economist and one of the main authors of the company's sales projection, said most forecasts are "below us right now". Those estimates discount positive effects of the government's efforts to stimulate the economy, she said.

    A little extreme

    They are "a little extreme", she said. "I don't want to use the term 'depression', but those forecasts suggest that all these positive things are taking place on paper and that people don't respond."

    Americans are likely to start buying again as the average age of cars on the road tops nine years, boosting repair costs, Kolinski Morris said.

    "There is replacement demand out there that is being put off," she said. "There is an economic cost to operating an older vehicle."

    Should the worst-case scenario play out, Ford's finances may make it complicated to accept government money.

    Under the terms of the 2006 borrowing, those creditors must be paid off first in the event of a bankruptcy. As part of the aid package for GM and Chrysler, the federal government told the automakers to put taxpayers at the front of the line for payment in that situation.

    "We could be put in default," Chief Executive Officer Alan Mulally told Congress when asked about what would happen were Ford to take the step required of GM and Chrysler.

    (Source: China Daily/Agencies)

Detroit auto show opens amid economic woes

    Detroit, Jan. 11 (Xinhua) -- The North American International Auto Show (NAIAS), one of world's most prestigious of its kind, opens Sunday in Detroit as a deepened economic recession inflicts deep woes on automakers worldwide and overshadows a possible recovery of U.S. ailing auto industry in the near future.

    The absence of some big names from the show, including Nissan, Suzuki, Mitsubishi, Ferrari, Land Rover, Rolls-Royce and Porsche, serves as a reminder what a trying time the automakers have to endure. The missing companies pull out of the event to save cash in order to outlast the economic slump.

U.S. auto bailout draft bill drops labor targets 

    BEIJING, Jan. 11 -- Legislation proposed to tighten the sweeping U.S. corporate bailout program has omitted specific targets for labor concessions that were a key feature of last month's Bush administration rescue of distressed auto makers.

    A portion of the bill proposed by House Financial Services Committee Chairman Barney Frank on Friday sought to codify the auto bailout with terms that, with two exceptions, basically mirror those imposed by the White House when it extended 17.4 billion U.S. dollars in emergency loans to General Motors and Chrysler.

Auto sales in U.S. fall dramatically in 2008 

    LOS ANGELES, Jan. 6 (Xinhua) -- Auto sales in the United States fell in 2008, with a total of 13.2 million cars and light trucks sold, down from 16.1 million in 2007, it was reported on Tuesday.

    The year of 2008 was the worst year for auto sales since 1992 when there were 70 million fewer Americans, the Los Angeles Times said.  Full story

U.S. auto makers receiving government loan

General Motors vehicles are seen at a car dealership in Toronto Dec. 12, 2008. General Motors Corp. major auto maker in the U.S., collected a loan of 4 billion dollars from the U.S. Treasury Department on the eve of the new year, reports from Detroit said Thursday.  (Xinhua/Reuters Photo) Photo Gallery>>>

    CHICAGO, Jan. 1 (Xinhua) -- General Motors Corp. major auto maker in the U.S., collected a loan of 4 billion dollars from the U.S. Treasury Department on the eve of the new year, reports from Detroit said Thursday.

    The cash infusion will prevent the automaker's imminent financial collapse after a dramatic sales decline and cash crunch this year.  

White House unveils mulit-billion-dollar loans to bail out auto industry 

    WASHINGTON, Dec. 19 (Xinhua) -- The White House announced on Friday a rescue plan of multi-billion dollars in emergency loans to bail out the country's crippled auto industry from bankruptcy.

    President George W. Bush made the announcement a week after Senate Republicans blocked a 14 billion dollars legislation to aid the automakers that had been negotiated by the White House and Congressional Democrats.

Global auto bailout, a risky game? 

    NEW YORK, Dec. 24 (Xinhua) -- When the White House finally handed out to the Detroit carmakers a long-awaited lifeline last Friday, it seemed to have triggered or at least fueled a wave of auto industry bailouts around the world.

    While many cheer the move as a timely rescue for the victims of global economic recession, many others have raised the acute question: Will this really work or will it make things even worse?