CORRECTED - U.S. February auto sales plunge as recession deepens

(Corrects paragragh 3 to show 16th consecutive monthly sales decline and paragraph 27 to show Kia sales comparison versus year earlier, not January)

By Kevin Krolicki

DETROIT (Reuters) - U.S. auto sales dropped by more than 41 percent in February to the lowest level in almost three decades as deepening economic uncertainty drove Americans away from big purchases and new debt despite aggressive discounts from major automakers.

General Motors Corp, which is racing to complete a restructuring plan this month to keep it from bankruptcy, led the sinking industry lower with a 53 percent drop in sales.

The results mark the 16th consecutive monthly drop in auto sales and come as a deepening recession in the United States and slowing global markets have pushed automakers to ratchet back production, ramp up discounts and seek government financing in a bid to survive.

"In our view, we are in an automotive depression," said Standard & Poor's equity analyst Efraim Levy.

"Shell-shocked consumers fearful for their jobs, the value of their homes and stock market assets are wary of making the sizable discretionary purchases," he said.

Sales at Ford Motor Co, now considered the best-positioned of the embattled U.S. automakers, dropped 48 percent in February. Chrysler LLC posted a drop of 44 percent.

Japanese automakers fared only slightly better with sales drops of 37 percent at Toyota Motor Corp and Nissan Motor Co and 38 percent at Honda Motor Co.