DETROIT (Reuters) - U.S. auto sales fell 37 percent in March, a smaller-than-expected drop that encouraged hope that the world’s largest car market is nearing a bottom after a freefall that has pulled the industry into a deepening crisis.
General Motors (GM.N), which has until June to complete a new restructuring under federal oversight that could push it into bankruptcy, said its sales fell 45 percent, the largest decline of any of the major carmakers.
Industry-wide sales fell for the 17th consecutive month but were up from February with the help of record discounts and higher sales to fleet operators such as government agencies.
Auto sales typically account for as much as a fifth of overall U.S. retail sales and industry executives held out hope that the market would hit bottom over the next quarter or so.
“I think we’re seeing maybe the first signs of a brightening in the outlook for the auto industry in March,” GM chief sales analyst Mike DiGiovanni said on a conference call.
Sales for Ford (F.N), the only U.S. carmaker operating without government aid, dropped 41 percent.
Major Japanese carmakers and Chrysler posted sales declines ranging between 36 and 39 percent.
Overall sales were almost 9.9 million vehicles on the annualised rate tracked by analysts, down sharply from the average near 16 million over the past decade.
“We believe we may be at or near the trough of the industry’s year-to-year comparisons but do not see an uptick in industry demand before (the fourth quarter) at the earliest,” said Efraim Levy, an equity analyst with Standard & Poor’s.
“Share prices are looking for a new direction, so they reacted positively to the U.S. sales results,” UBS Securities analyst Tatsuo Yoshida said, although he said the year-on-year decline was still staggering and the annualised sales rate extremely low.
Toyota rose 5.8 percent, Honda gained 8.9 percent and Nissan put on 9.6 percent in Thursday morning trade in Tokyo.
Discounts in the United States hit a record in March, averaging $3,169 per vehicle based on the value of offers including rebates and zero-percent financing, auto website Edmunds.com said.
Both GM and Ford began rolling out new sales programmes intended to win over car shoppers worried about losing their jobs by promising to cover loan payments if that happens.
Meanwhile, GM financing affiliate GMAC Financial Services said it would lower financing costs for dealers and resume making loans to subprime borrowers.
GMAC said the moves are expected to make at least $5 billion (3.4 billion pounds)of credit available to customers over the next 60 days as GM races to restructure.
In Washington, Chrysler Chief Executive Bob Nardelli and Fiat FIA.MI Chief Executive Sergio Marchionne met behind closed doors with members of the U.S. car task force led by former investment banker Steve Rattner, according to people with knowledge of the meeting.
The task force has given Chrysler until the end of April to complete a tie-up with Fiat and warned that it would cut off federal funding if it fails to do so.
At the same time, the task force waded into the complex deal between GM and its former parts subsidiary Delphi DPHIQ.PK, asking a federal bankruptcy judge to block GM from extending $150 million to Delphi.
GM’s shares closed almost unchanged at $1.93 but have lost almost half their value this week on rising chances of a bankruptcy filing that could wipe out existing shareholders.
GM’s 8.375 percent bond due in 2033 fell almost 2 cents to just about 11 cents on the dollar, MarketAxess said.
Elsewhere, car markets in Europe showed tentative signs of recovery, helped in part by government tax incentives encouraging cash-strapped consumers to ditch old cars for new and more fuel-efficient models.
Sales rose strongly in France and Italy and the rate of decline slowed in Spain.
In Germany, officials said more than 860,000 car owners had signed up for a new-for-old “scrappage” bonus.
The success of that programme has become the model for a bill under consideration in the U.S. Congress that won backing this week from President Barack Obama.
In Japan, auto sales slumped 25.3 percent in March from a year earlier.
South Korea’s five carmakers posted an 18.8 percent drop in sales in March, with exports down 19.9 percent. Hyundai’s (005380.KS) registrations fell 9.8 percent.
Additional reporting by John Crawley, Walden Siew, John Parry, David Bailey, Marcel Michelson, Jeff Mason, Kevin Krolicki, Soyoung Kim, Anton Doroshev, Chang-Ran Kim; writing by Patrick Fitzgibbons; Editing by Michael Watson