Ford and GM cut production as demand drops
General Motors and Ford said Monday they would cut North American vehicle production in response to weakening demand, especially for big sport-utility vehicles and pick-up trucks. Five of the six biggest carmakers reported a drop in February car and light truck sales in spite of more generous discounts and other incentives. Even demand for Toyota's Prius petrol-electric hybrid hatchback slipped 10 per cent. General Motors announced a 12.9 per cent fall in light vehicle sales compared with February 2007. Toyota, which overtook Ford last year as the number-two carmaker in the US, saw a 2.7 per cent drop. Ford's sales were 6.9 per cent lower. Chrysler and Nissan also reported declines. The exception was Honda, which gained 4.9 per cent. There were was one more selling day last month than in February 2007. According to Autodata, a market research firm, total light vehicle sales fell to a seasonally adjusted annual rate of 15.4 million units in February from 16.6 million a year earlier. Mark LaNeve, GM's vice-president for North American sales, said: "Traffic was soft, business was tough all month.' He added that tightening credit conditions were affecting sales "on the margin'. Sales of the Chevrolet Silverado pick-up, GM's top-selling vehicle, slumped 28 per cent. The pick-up market has been especially vulnerable to the slump in housebuilding. Edmunds.com, an online pricing service, estimated that carmakers raised incentives by an average 8.4 per cent last month compared to a year earlier. Toyota raised its incentives 40 per cent to more than $1,000 a vehicle. The company shrugged off the drop in Prius sales, ascribing it to record demand last February at the start of a special promotion. GM's incentives, totalling $3,315, were almost a quarter higher, diluting its drive over the past two years to wean itself from these promotions. Jim Farley, Ford's marketing chief, said: "The industry as a whole will be under more pricing pressure.' GM said it planned to cut second-quarter production 5 per cent. Ford announced a 10 per cent reduction. Honda's performance underlined a move towards small cars and crossover vehicles, which look like SUVs but are built on car platforms. Edmunds.com, said Honda spent more on incentives than Toyota last month, a rare event. Separately, GM announced the promotion of Fritz Henderson, chief financial officer, to president and chief operating officer. Ray Young, vice-president of finance and head of GM Brazil, succeeds Henderson as chief financial officer.