Honda forecasts lower US car sales next year

Tokyo: Honda Motor expects the US car market to fall by five per cent next year, and Japan's No 2 carmaker said it could cut output further in the latest sign that deepening economic woes have made sales forecasts a moving target.

"Conditions are changing by the day, and it's difficult to see when the US market will recover," Executive Vice-President Koichi Kondo told a news conference in Tokyo.

"But it seems this is about the bottom for the US market, and we're assuming a total market of 12.5-12.6 million vehicles next year as we set our business plans," he said.

Kondo added that total volumes would likely settle around 13.2-13.3 million in 2008, versus more than 16 million last year.

The global financial crisis has deepened already weak consumer sentiment, battering vehicle sales and threatening the survival of Detroit's General Motors, Ford Motor and Chrysler.

The Detroit Three this week urged Congress to authorise $34 billion in loans and credit lines, saying they will restructure, and cut models, jobs and executive pay to remain viable. The alternative -bankruptcy - would cause a "catastrophic collapse" in the US economy, GM Rick Wagoner has warned.

The slowdown is already affecting ancillary sectors.

Nippon Steel said yesterday that it and ArcelorMittal, the world's two biggest steelmakers, are delaying plans to double automotive sheet capacity at their US joint venture.

GM and Chrysler are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multi-billion dollar government bailout, according to a Bloomberg report, which cited a person familiar with internal discussions.

Neither company was available for comment.

GM and Ford want to shed non-core assets such as Saab and Volvo, both Swedish brands. But that is looking a tough sell as the Swedish government dismissed the idea, while other global carmakers tighten their budgets to stop a cash drain.

Analysts and auto executives say that leaves a purchase by well-funded Chinese automakers as the most likely scenario as Indian carmakers - also new to the car industry and keen to gain technological knowhow - cool to acquisitions.

Dongfeng Motor Group, China's third-largest automaker, is monitoring the Detroit situation, a source told Reuters.