Thursday, November 06, 2008

Collapse of US auto sales points to deep recession

Sales fell by a staggering 31.9 percent last month over the previous year in a further sign the U.S. economy has entered a deep and protracted downturn, threatening the jobs of millions of working people.

At the current rate, automakers expect to sell their lowest number of cars and trucks since 1983. General Motors—which is seeking a government bailout to avert bankruptcy and expedite a merger with number-three US automaker Chrysler—suffered a 45 percent decline in sales.

Adjusted for increases in the US population, last month was the worst since World War II, GM sales analyst Michael DiGiovanni told reporters. “This is clearly a severe recession,” he said.

One or more of Detroit’s Big Three automakers are not expected to survive the crisis. In the 1970s, US carmakers controlled more than 80 percent of the US market, with GM selling more than half the cars. GM, which employed 350,000 unionized workers in 1970, now has fewer than 70,000 blue-collar workers.

As a result of falling demand from steelmakers—a key supplier for all manufacturers—production at 17 of the nation’s 29 blast furnaces is being shut down. “We’re dealing with a situation that could develop into another Great Depression, if not handled properly,” Daniel DiMicco, chief executive of Charlotte, North Carolina-based steelmaker Nucor Corp., told the Wall Street Journal.

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