Ford Motor reported January sales dropped 42 percent, which is far worse than the estimate on Wall Street of a decline of 31 percent.
On the surface, this would appear to support concerns that the auto market has not stabilized. I'm not sure that is a fair conclusion. Here's why.
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Ford's retail sales last month were down about 27 percent, roughly in line with how much they declined in December. This would support the idea that retail auto sales (those to the public through dealerships) are stabilizing. The reason overall sales dropped 42 percent is because fleet sales (rental car firms, companies, government agencies) fell substantially last month.
One other encouraging note for Ford is that January could be the fourth straight month the auto maker gained market share.
The more important question for Ford and its investors is whether January gives us any sense that this company can ride out this economic storm without needing a Federal bailout. It's hard to tell from just one month.
Standard and Poor's put out a note today questioning how long Ford can survive without government aid if auto sales remain this weak. Ford CEO Alan Mulally maintains his company should be okay this year, in part because the rate at which Ford is burning through cash is slowing down.
Stay tuned for General Motors numbers early this afternoon.
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