(2 of 2)
Ford's new front-wheel-drive subcompacts, the Ford Escort and the Mercury Lynx, are selling better. Ford has orders for 180,000 of them, and is expected to meet projected 1981 sales of 345,000. But Ford's larger cars, such as the Granada and the Mercury Cougar, continue to gather dust on show room floors. The company has already shut down plants in Atlanta and Chicago to reduce inventories of the slow-selling cars.
General Motors, which did not introduce any totally new models this fall but will put out its subcompact J-cars next spring, is likewise suffering a sales falloff. In November it sold 7.1% fewer cars than in the same month last year.
So far this year, its orders have dropped 15.7%. Nevertheless, the Chevrolet Chevette and the Chevrolet Citation are among the country's bestselling models.
Sales at tiny American Motors Corp.
dropped 19.1% in November. The company has sent letters to stockholders warning that it could go bankrupt if they do not approve next week a plan for French-owned Renault to acquire as much as 59% of the company. Even if the deal is accepted, AMC faces at least three years of heavy losses before a new line of Renault-designed cars can be built at AMC's U.S. plant in Kenosha, Wis.
Foreign automakers are also having trouble selling in the U.S. market.
Volkswagen's Rabbit faces tough com petition from new American subcompacts like the Ford Escort, and sales of the U.S.-made Rabbit dropped 26% in November.
Buyers are also shunning the Scirocco and Dasher models, which cost up to $10,000. During the past two months, Datsun and Toyota sold fewer cars than a year ago, but Honda has sold more. Imports in November accounted for an estimated 24% of the U.S. market, as compared with nearly 30% earlier this year. The continued large number of imports led the House of Representatives last week to authorize the President to negotiate curbs on Japanese autos.
In an effort to ease the sting of high finance charges and to help sales, both Ford and Chrysler announced last week that they would cut the effective price of many models through interest-rate subsidies. Ford said it will charge customers no higher than 12% interest; Chrysler will provide cash rebates that will vary in size depending on the prime rate.
Iacocca denounced the Federal Reserve Board's high interest policies as "madness" and conceded that his company will soon have to go back to the Government's Loan Guarantee Board for perhaps $200 million in federal-backed loans. Chrysler has already borrowed $800 million of the $1.5 billion that Congress agreed last spring to guarantee. Once again, Chrysler's continued existence is seriously in question.
— By Alexander Taylor. Reported by Christopher Redman/ Detroit