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US Car Sales Fall 27 Percent as Credit Squeeze Takes Hold


The U.S. credit crunch is keeping American consumers out of car showrooms. In September, U.S. car sales were down a stunning 27 percent. VOA's Barry Wood reports from Detroit, the home of the U.S. auto industry.

Most Americans buy cars on credit. But loans are now hard to get.

"It's definitely been the most challenging for me," said Jay Sturtz, sales manager at a Ford dealership in Dearborn, Michigan.

Sturtz says lenders have tightened standards to make sure loans will be repaid.

"They've definitely pulled back, in just the past three or four months," he added.

With buyers scarce, car companies are planning more production cuts and layoffs.

Michigan has already lost nearly 200,000 auto-related jobs this decade. Detroit's big three have lost $100 billion over four years.

Automotive News publisher Keith Crain says the outlook is grim.

"The car business is really suffering right now," Crain said, "and I think it will continue to suffer until we get some stability."

Crain says the industry was already reeling from soaring fuel prices.

"They have had a tremendous shock with the higher prices of gasoline that has really affected the Detroit three."

Analysts say the big three don't have the small cars people want and therefore a return to profitability is a long way off. Car dealer Sturtz has seen some of his competitors go out of business.

"The guys that are over-extended and reached a little too far," Sturtz said. "When the valve shuts off, you've got to get your ducks in a row. If you're out there hanging in the wind, you could be in trouble."

With Detroit already in hard times, people are dreading the prospect of more job losses, plant closures, and foreclosures on homes.