Big 3 Auto bailout

[AMDScooter]

Scoot, you can change the title yourself to whatever you like by going into advance edit mode in your first post

Ahh.. there it is.. thx.

[AMDScooter]

Hmmm... I mean many of us knew they were headed that way eventually, but what the hell! Why did we have to throw tens of BILLIONS at them first!

Obama's man called shots on bankruptcy
Proceedings show he planned Chapter 11 for autos in advance

[AMDScooter]

[AMDScooter]

Yup.. Obama is not interested in running car companies. Only keeping them open at the taxpayers expense so his union pals don't lose their cushy~overpaid jobs. To prove he's not interested.. he's appointed a guy who up to this point had no interest or experience in running car companies either.

Really... you could not make this sh*t up.

Whitacre Vows to ‘Learn About Cars’ as GM Chairman (Update1)

une 10 (Bloomberg) -- Edward E. Whitacre Jr. built AT&T Inc. into the biggest U.S. provider of telephone service over a 43-year-career. By his own admission, he becomes chairman of General Motors Corp. knowing nothing about the auto industry.

The 6-foot-4-inch Texan nicknamed “Big Ed” said steering the nation’s largest automaker after bankruptcy is “a public service.” People who know him say he can meet GM’s need for the type of transformation he orchestrated at Dallas-based AT&T.

“I don’t know anything about cars,” Whitacre, 67, said yesterday in an interview after his appointment. “A business is a business, and I think I can learn about cars. I’m not that old, and I think the business principles are the same.”

Whitacre’s selection bucks more than a half-century of tradition at GM, where the only non-executives to lead the board since 1937 were interim Chairman Kent Kresa and John Smale, who held the job from 1992 through 1995. Whitacre will take the post when Detroit-based GM exits Chapter 11, perhaps by Aug. 31.

The White House said Ford Motor Co. Chief Executive Officer Alan Mulally’s move from planemaker Boeing Co. shows that success doesn’t hinge on automotive experience. Ford is the only major U.S. automaker to avoid bankruptcy.

“What was required was somebody with savvy, big-business experience that could take a company, change its management culture, make some of those tough decisions to put it on that path toward viability,” Press Secretary Robert Gibbs told reporters at a briefing today.

‘Good Choice’

A bachelor’s degree in industrial engineering and record in shaping a “monolithic” AT&T into a diversified enterprise make Whitacre “a good choice” for GM, said Jim Hall, principal of 2953 Analytics auto-consulting firm in Birmingham, Michigan.

“He was one of the guys who helped create a new AT&T that wasn’t so dependent on land-line phone service,” said Hall, a former GM engineer. “There’s a parallel with General Motors. GM is not now about just making cars. It’s about re-creating itself as a 21st-century car company. They have to have somebody at the top that understands they have to make a new GM.”

The U.S. Treasury, which is backing GM’s restructuring with about $65 billion, reached out “some weeks ago,” Whitacre said, enticing him out of retirement to help oversee a company that has lost almost $88 billion since 2004.

Talking With Rattner

“Lots of conversations” followed with Steven Rattner, the Wall Street dealmaker running President Barack Obama’s car task force, said Whitacre, adding that Treasury’s message was: “We need your help. It’s a great company. You could be a lot of assistance to GM.”

In addition to Kresa, the automaker’s new, 13-member board will include five holdovers -- CEO Fritz Henderson and directors Philip A. Laskawy, Kathryn V. Marinello, Erroll B. Davis Jr. and E. Neville Isdell. Six others will retire, including all four who were appointed in the 1990s.

Rattner asked former CEO Rick Wagoner to cede his job to Henderson and named Kresa interim chairman in March after rejecting GM’s plan to return to profit.

Whitacre will have to contend with Treasury’s oversight, as the biggest equity holder in the so-called New GM, and pressure from Congress. He has faced lawmakers and investors before.

In 2006, while defending AT&T’s customer-privacy policy at a hearing where U.S. senators pressed him about the alleged sharing of data with a spy agency, Whitacre was rebuked by then- Chairman Arlen Specter for “contemptuous answers.”

Executive-Pay Vote

A year later, AT&T management prevailed on a shareholder proposal seeking an advisory role in executive pay, which got 44 percent of the vote. Whitacre announced his retirement at that meeting, leaving with compensation valued at $158.5 million, according to the Corporate Library in Portland, Maine.

GM’s directors are now working for $1 a year. The automaker plans to disclose board compensation terms when it announces the rest of the new members, said Julie Gibson, a spokeswoman.

James Kahan, 61, a former AT&T executive who worked with Whitacre for 20 years and talked to him about the job the night before it was announced, predicted his old boss will probably be heavily involved in GM’s restructuring.

“He’s not one to sit idly by,” Kahan said.

After graduating from Texas Tech University in Lubbock in 1964, Whitacre joined AT&T’s Southwestern Bell unit just as the touch-tone phone was being introduced. He worked his way up to CEO in 1990 and bought Pacific Telesis Group in California for $16 billion in 1997.

Telecom Consolidation

That was the first link-up among the eight Baby Bells, created in 1984 after then-AT&T Corp. agreed to cede local phone operations, and started a buying spree that totaled almost $200 billion and helped create the largest U.S. phone company.

“He started the whole telecom consolidation because he recognized that scale was going to be important,” said Jim Ellis, 66, a former general counsel at AT&T, who worked with Whitacre for about 30 years. “He had a vision to build the company, to increase the sales and the size, the efficiency.”

SBC, the smallest of the local Bells, changed its name to AT&T Inc. after it bought AT&T Corp. in 2005 for $16.5 billion and in 2006 had its first annual share-price gain in eight years. A year after Whitacre retired, AT&T relocated to Dallas, near his hometown of Ennis, from San Antonio.

The ability to sustain a “global enterprise” and set clear lines of responsibility is pivotal to GM’s future, said Michael Robinet, an automotive analyst at CSM Worldwide Inc. in Northville, Michigan.

‘Ensuring a Strategy’

“Let’s face it: The chairman is not necessarily operational,” Robinet said. “The chairman is about ensuring a strategy is followed.”

GM is proposing to sell its best assets to create a new company around its Chevrolet, Cadillac, GMC and Buick brands within 90 days. The remaining assets will be liquidated in bankruptcy to help pay off creditors.

Whitacre, a resident of San Antonio, a South Texas city of 1.2 million, will set a different cultural and geographic tone at GM, said Kahan and Ellis, the former AT&T executives.

Detroit is 1,237 miles to the northeast, almost twice as far as to Mexico City. While GM’s only Texas assembly plant is in Arlington, a five-hour drive, San Antonio is home to a pickup factory for Toyota Motor Corp., which ended GM’s 77-year reign as the world’s largest automaker in 2008 and beat GM in adopting new models such as hybrids.

As a “man of action,” Whitacre won’t sit still, Kahan said. “He doesn’t like long meetings,” Kahan said. “He’ll be fresh air.”

To contact the reporters on this story: Amy Thomson in New York at athomson6@bloomberg.net; Katie Merx in Southfield, Michigan, at kmerx@bloomberg.net
Last Updated: June 10, 2009 17:36 EDT

[bk94si]

The title of this thread needs to be changed. It is no longer a bailout but a government takeover. That goes for the banking industry also.

[Dutchcedar]

^^^ And they're hardly the "big 3" anymore.

[AMDScooter]

The title of this thread needs to be changed. It is no longer a bailout but a government takeover. That goes for the banking industry also.

True that on both counts by both you and Dutch... but no one seems confused as to what the subject matter is.

[AMDScooter]

Ya think??

A Rescue That Overreached?

Nationalizing General Motors, and part of Chrysler, may or may not turn out to be a good deal for the taxpayers. I have a different concern, though: Was it constitutional?

With hundreds of thousands of jobs on the line, this may seem a churlish question. Then again, the temptation to bend the rules of democracy is always greatest in a crisis. It wasn't so long ago that a president claimed the power to do all sorts of questionable things -- from waterboarding to electronic surveillance -- because the country faced a crisis.

Bailing out Detroit is not in the same category, morally, as torture. Still, a presidential decision to federalize a vast sector of the U.S. economy affects the country's vital interests and, potentially, the rights of its citizens. Such an extraordinary measure should rest on the firmest possible foundation of democratic legitimacy. Does President Obama's rescue of GM and Chrysler meet the test?

The classic statement on such matters comes from Supreme Court Justice Robert H. Jackson's opinion in a case about another crisis-driven assertion of executive power: President Harry S. Truman's seizure of steel mills in 1952. Truman wanted to prevent a strike during the Korean War; the court blocked him.

In Jackson's analysis, the president's power is at its "maximum" when he "acts pursuant to an express or implied authorization of Congress." The Obama administration argues that it has such authority today, under the Emergency Economic Stabilization Act of Oct. 3, 2008. This law established the $700 billion Troubled Assets Relief Program (TARP), the source of the $30 billion the Obama administration pumped into GM as well as the $8 billion it has committed to Chrysler.

The only problem is that the law doesn't give "express" authority to buy a car company. At the time Congress approved TARP -- grudgingly -- everyone assumed it was to buy up Wall Street's toxic mortgage-backed securities, which are the only class of assets named in the law. (The law did contemplate other, unspecified asset purchases.) The statute says that "financial institutions" -- defined as banks, savings associations, credit unions, security broker-dealers and insurance companies -- can get aid.

What about "implicit" authority? The law says its definition of financial institutions is "not limited to" banks. The Obama administration emphasized this point to the Supreme Court in a memorandum defending its actions against Indiana pension funds that hold Chrysler bonds. And GM and Chrysler do finance dealer inventories and consumer purchases, a bank-like function.

But if Congress meant TARP for the auto companies, then why did it leave them off the law's list of "financial institutions"? Why did it spend much of December trying -- and failing -- to pass a separate auto bailout? In its court filing, the Obama administration insists that Treasury's interpretation of the law's "ambiguous" definition is "entitled to judicial deference." In other words, if Treasury wants to call a car company a bank for the sake of the economy, the courts should let it.

Yes, the law's purpose was to "restore liquidity and stability to the financial system of the United States," and saving GM and Chrysler might do that. But the administration's argument comes dangerously close to reading "by any means necessary" into the law.

So were the Indiana pension funds right? Not quite. It's true that, according to Jackson, executive power is "at its lowest ebb" when the president's action is "incompatible with the expressed or implied will of Congress." But, even if the GM-Chrysler deal doesn't fit the language of the law, it's not necessarily "incompatible" with Congress's will.

Indeed, when the auto companies began collapsing in December, Democratic leaders in Congress urged the Bush administration to save them with TARP money. Though they duly buttressed this demand with a legal opinion from none other than the acting comptroller general, basically it was opportunistic: House Speaker Nancy Pelosi preferred to use TARP rather than the Bush administration's choice: previously authorized energy-efficiency loans.

Still, with its proposal going nowhere in Congress, a presidential transition at hand and Detroit tanking, the Bush administration relented; it released $17.4 billion from TARP loans to GM and Chrysler. This set a precedent for Obama, which the Democratic Congress has cheerfully allowed to stand.

A political veteran as well as a constitutional scholar, Jackson anticipated situations like this. He described "a zone of twilight" in which "the President acts in absence of either a congressional grant or denial of authority" because "congressional inertia, indifference or quiescence may sometimes, at least, as a practical matter, enable, if not invite, measures on independent presidential responsibility."

In other words, sometimes the president can get away with stretching his authority because Congress would rather not be held accountable for formally defining it.

The GM-Chrysler deals appear to be such an instance. But the constitutional ambiguity surrounding this use of TARP may prove tolerable only as long as the policy itself is. If GM and Chrysler start gobbling up even more funds -- or if additional non-financial companies get bailouts -- more Americans might question the president's power to select certain firms for federal rescue. Fortunately, the TARP statute expires at the end of this year. Let's hope the next version is a little less open to interpretation.

[AMDScooter]

I hope they stick to it. What Bamma did to "secured" bondholders to favor his union pals was despicable.

Indiana Funds May Not Be Done with Chrysler

Indiana Treasurer Richard Mourdock is contemplating yet another legal challenge to the terms under which Chrysler sped through reorganization

By David Welch

The Indiana pension funds that went all the way to the Supreme Court to try to stop the sale of Chrysler to Italy's Fiat Auto (FIA.MI) might be back again. Indiana Treasurer Richard Mourdock is mulling a legal motion to get the nation's highest court to rule whether the sale—which was finalized in bankruptcy court on June 10—was valid.

The funds hope that the court will either overturn the sale or force the new Chrysler—which is owned by Fiat, the United Auto Workers, and the federal government—to pay secured creditors such as the Indiana pension plans some more money. Legal experts say it's a long shot, since a federal appeals court and Supreme Court Justice Ruth Bader Ginsberg already denied their efforts during the bankruptcy process.

Still, while it's hard to imagine the sale of Chrysler being overturned, Indiana's persistence shows what can happen now that the government is so deeply involved in Big Business. People like Mourdock cry foul and fight not only to recover more money, but to prove a point.
Driven by Principle

Mourdock, who has already spent $2 million of Indiana's money in a failed fight to recover more cash, admits that he is also motivated by principle. Mourdock argues the government rushed the sale of Chrysler and used its influence to manipulate bankruptcy proceedings. He is also personally opposed to government ownership of business. "John Wayne never needed a bailout," Mourdock says. "Is it about money? Is it about principle? Is it about the law? Yes. It's about more than Chrysler and Indiana. When we see the law has no meaning, it sets a bad precedent."

He maintains that the fight was about getting more cash for the pension funds, which bought the Chrysler debt at a discount rate of 43¢ on the dollar last year. Since the funds paid $18.3 million, they only needed $6 million more to break even.

The Treasurer says he was torn between his own constituents. Pensioners benefiting from those three funds wanted him to pursue a better settlement on the Chrysler debt.
Pro Bono Help

If Mourdock decides to file the motion, the pension plans' hired counsel, aggressive Florida attorney Tom Lauria, will work pro bono. But the state's Solicitor General would also work on the case. That could be problematic since some of Mourdock's own constituents oppose his fight. Had Indiana stopped the sale and the carmaker was liquidated, some of the state's 7,000 Chrysler jobs would have been at risk. Those voters let him hear it. "They thought I was trying to attack their jobs," Mourdock says.

That's the tightrope Mourdock walks. While some constituents want him to drop the fight, he and Lauria may keep going. They argue that the government wielded heavy influence to get the majority of other secured creditors to take 29¢ on the dollar when unsecured creditors—namely a health-care trust for retired UAW members—got paid much more. Secured creditors normally take precedence in bankruptcy. But in this case, Chrysler and the Treasury Dept. argued that a quick bankruptcy was needed to finalize the sale to Fiat and keep the stigma of bankruptcy from further hurting car sales. So they used a process called a "363 sale" to sell the Chrysler assets they wanted to keep to Fiat, the UAW's retiree health-care trust, and the government.

Mourdock says that if the sale wasn't rushed, another buyer could have emerged and paid more. Or at the least the secured creditors could have gotten more and the government and UAW would have been paid less. But that, too, would have been tough to come by. Treasury officials said that there were no other buyers. In court documents, Chrysler said the company talked with several other carmakers, including General Motors (GM) and Renault-Nissan, about a sale or partnership but could not find a deal. Fiat was the only carmaker willing to join up with Chrysler.
No Smoking Gun

In this case, the vast majority of secured creditors agreed to accept 29¢ on the dollar. When that happens, bankruptcy court can make all of the creditors take that deal, which is commonly referred to as a "cram down."

Lauria and Mourdock both complained that the big banks that accepted the deal—namely JPMorgan Chase (JPM), Citigroup (C), and Goldman Sachs (GS)—had also received money from the Treasury Dept.'s Troubled Asset Relief Program (TARP), just like Chrysler did. So they were willing to help out Treasury with Chrysler. "Why did the TARP banks go from 100% to 29%?" asks Mourdock. "The U.S. government told those banks that they would be taken care of in other ways."

Treasury denies the claim. Mourdock admits he has no smoking gun that proves such collusion. And so far, judges in federal bankruptcy court, appeals court, and Justice Ginsberg all have denied Indiana's efforts to stop the sale.
Lack of Congressional Consultation

Lauria says Justice Ginsberg denied the review without ruling on the merits of the case. So he wants to get a review. He plans to push the issue on three points. His first point is that the UAW and federal government are two of the purchasers of Chrysler, but they have conflicts of interest because they were also creditors before the bankruptcy started. So the sale could be overturned on those grounds. His second complaint is that if the court believes they are still legitimate buyers, then he wants the court to revisit how much every creditor got paid.

And last, Lauria still wants the Supreme Court to rule on whether the Treasury Dept. could loan to carmakers using TARP without consent from Congress. TARP was originally set up for banks. If not, then the government couldn't own a piece of Chrysler and the whole deal would have to be reconstructed.

Given the repeated rejections in court, experts say it is unlikely that the Indiana pension funds would get any more than the $12.3 million on the $42 million in debt that they hold. Chrysler is supposed to pay $2 billion, which will be distributed among the secured creditors in exchange for their debt. Even if the Supreme Court agrees with Lauria, the court order cannot take any assets away from the new company now that the sale is completed, says Lynn Lopucki, professor of law at the University of California at Los Angeles. "If they win, it does not affect the sale," Lopucki says. "The court can take the case and rule on it. But the sale has gone through. They can't get any more value."
Wants a Supreme Hearing

Having lost every round so far, Mourdock has to decide whether he has a shot at winning and if his constituents want him to keep fighting. Lauria says that if the Supreme Court will just listen, he will win, based on a fair interpretation of the law. "I would not expect any funds affected by this ripoff to pay additional sums to make a point of law that would not yield potential benefit to those funds," he wrote in an e-mail. "I'm still obligated to do the best I can for the people I represent."

Return to the Auto Bailout Special Report Table of Contents

Welch is BusinessWeek's Detroit bureau chief.

[AMDScooter]

Why Obama Bailed Out Auto Makers

From his second autobiography, The Audacity Of Hope – Thoughts On Reclaiming The American Dream, pp 99-100:

Chapter Five – Opportunity

… So far, the Bush Administration’s energy policy has been focused on subsidies to big oil companies and expanded drilling—coupled with token investments in the development of alternative fuels. This approach might make economic sense if America harbored plentiful and untapped oil supplies that could meet its needs (and if oil companies weren’t experiencing record profits). But such supplies don’t exist. The United States has 3 percent of the world’s oil reserves. We use 25 percent of the world’s oil. We can’t drill our way out of the problem.

What we can do is create renewable, cleaner energy sources for the twenty-first century. Instead of subsidizing the oil industry, we should end every single tax break the industry currently receives and demand that 1 percent of the revenues from oil companies with over $1 billion in quarterly profits go toward financing alternative energy research and the necessary infrastructure. Not only would such a project pay huge economic, foreign policy, and environmental dividends—it could be the vehicle by which we train an entire new generation of American scientists and engineers and a source of new export industries and high-wage jobs…

Take the issue of fuel-efficiency standards. Had we steadily raised those standards over the past two decades, when gas was cheap, U.S. automakers might have invested in new, fuel-efficient models instead of gas-guzzling SUVs—making them more competitive as gas prices rose. Instead, we’re seeing Japanese competitors run circles around Detroit. Toyota plans to sell one hundred thousand of their popular Priuses in 2006, while GM’s hybrid won’t even hit the market until 2007. And we can expect companies like Toyota to outcompete U.S automakers in the burgeoning Chinese market since China already has higher fuel-efficiency standards than we do.

The bottom line is that fuel-efficient cars and alternative fuels like E85, a fuel formulated with 85 percent ethanol, represent the future of the auto industry. It is a future American car companies can attain if we start making some tough choices now. For years U.S. automakers and the UAW have resisted higher fuel-efficiency standards because retooling costs money, and Detroit is already struggling under huge retiree health-care costs and stiff competition. So during my first year in the Senate I proposed legislation I called "Health Care for Hybrids." The bill makes a deal with U.S. automakers: In exchange for federal financial assistance in meeting the health-care costs of retired autoworkers, the Big Three would reinvest these savings into developing more fuel-efficient vehicles…

This was written back in 2006.

And, lest we forget, the auto bailouts were largely Mr. Obama’s idea in the first place.

Everything else has been a charade.

[AMDScooter]

Obama Picked Wrong Advisers for Auto Overhaul, Gerstner Says

June 27 (Bloomberg) -- Louis Gerstner, the former International Business Machines Corp. chief executive officer, praised President Barack Obama’s economic performance while criticizing the way the White House handled restructurings of General Motors Corp. and Chrysler LLC.

“Who did we pick to figure out how to fix the automobile industry? We picked two investment bankers,” Gerstner said in an interview with Bloomberg Television’s “Conversations with Judy Woodruff” airing today. “It’s sort of like asking the arsonist to run the fire department.”

In February, Obama named Steven Rattner, co-founder of private-equity firm Quadrangle Group LLC, as chief adviser on auto-industry issues, and Ron Bloom, a former vice president at investment bank Lazard Ltd., to advise his auto task force.

Gerstner, 67, said he didn’t question White House efforts to restructure failing banks and automakers. “They did the right thing,” said Gerstner, also a former chairman of Carlyle Group, the world’s second-largest private equity firm.

Gerstner also was supportive of the Obama administration’s fiscal stimulus and budgetary plans. “The spending programs they put in place, I think have been very appropriate,” he said.

The Obama administration is right to spend trillions to prevent economic and financial collapse, Gerstner said. “They learned from the major problems in the Depression that when you have this kind of deep economic downturn, you cannot spend too much,” he said.

Pressure on Dollar

Gerstner cautioned that it remains “uncertain” how the government can stop the spending “before we get tremendous pressure on the U.S. dollar, and therefore inflation pressure.”

He also expressed concerns about how quickly the government can end its ownership stakes in the automakers and banks and restore competition.

“The sooner the government gets out and turns over the management and the equity, the ownership, to private-sector people, the more comfortable I’m going to be,” he said.

Gerstner, who ran IBM from 1993 to 2002, said the problems that drove GM to a June 1 bankruptcy filing and necessitated about $65 billion in government aid are similar to those IBM faced in the early 1990s. Both firms, he said, became insular and lost sight of changes in the industry and among customers.

‘Looking Inside’

“GM has a culture of looking inside,” said Gerstner, who was an executive at American Express Co. and RJR Nabisco Inc. before joining IBM. “It denied the fact that customers really didn’t want the products they had. They wanted to stay with what they did.”

Gerstner, a longtime proponent of education overhaul, praised White House efforts in that area and said he’s “excited” about Education Secretary Arne Duncan.

“I’m as optimistic as I’ve ever been that we now have, in this administration, a leader in Secretary Duncan,” he said.

Gerstner said Duncan should consider reducing the number of U.S. school districts to “70 or 80” from about 16,000. The reduced number would represent “one for each state, one for each major city,” he said.

“I could not have changed IBM if I had 16,000 profit centers,” he said.

While the Obama administration hasn’t proposed eliminating any school districts, Gerstner said Duncan, who is overseeing distribution of more than $100 billion in education stimulus funds, may drive a “national transformation” of public schools.

Private Equity

Gerstner, who was Carlyle chairman from 2003 to 2008, said capital from private equity firms continues to play an important role in the economy.

“It provides a place for companies to go through transitions, important transitions, in a private environment where you can take a long time,” he said.

Gerstner said energy independence, the environment, education, Social Security and health care are the five issues most important to the U.S. If they aren’t addressed “we’ll be a second-rate nation by the middle of this century,” he said.

He praised Obama’s leadership on the issues.

“We now have a president who’s taking on every one of those and I am really excited about the prospects that maybe - maybe we’ll make some progress on some of these issues,” Gerstner said.

Asked if he had any interest in working in the administration, Gerstner answered: “None.”

[AMDScooter]

The competition is serious... NSFW! Language at end.

[AMDScooter]

AP trying to make bad news sound good as usual. Gubberment motors sales down over 33% is a good thing.. really? Down sales = stability??

US auto sales declines show signs of stability
Auto sales show signs of stability after tough year, but most June sales still worse than May

DETROIT (AP) -- U.S. car and truck sales showed signs of stabilizing in June after a year of sharp declines, but every major automaker except Honda Motor Co. reported lower sales than in May.

Still, year-over-year declines last month slowed for four of the six major carmakers, with Ford Motor Co. reporting the smallest drop in a year at 10.7 percent when compared with June of 2008.

Even Chrysler, which emerged from bankruptcy protection early in June, saw its year-over-year sales decline shrink, and analysts say that's among the signs that an auto industry slump that began with $4 per gallon gasoline last summer could be leveling off.

"It is unlikely things will get any worse," said Jesse Toprak, executive director of industry analysis for the auto Web site Edmunds.com.

Factors such as a slowly improving economy and government incentives of up to $4,500 to trade in inefficient clunkers for new vehicles could lead to modest improvements in the second half of the year, he said.

And while Chrysler's sales results were dismal, the figures were roughly in line with analyst estimates and reflect a company that is in a major transition following bankruptcy protection and new focus on more fuel efficient vehicles.

"At a time when they are emerging from bankruptcy and trying to reinvent themselves, it is not a huge surprise," Toprak said.

Toprak said affordability and gas prices that rose from $2.28 per gallon in May to $2.64 in June boosted sales of sales of compact cars, hybrids and compact sport utility vehicles.

Families and consumers looking for larger vehicles are also leaning more toward minivans because of the practicality when compared to alternatives like low gas mileage SUVs, he said.

Economists say there are signs that the economy is recovering, with housing starts rising more than expected in May and wholesale prices remaining in check. But the Conference Board reported Wednesday that consumer confidence fell unexpectedly in June.

"We're making steady progress," Jim Farley, Ford's group vice president of marketing, said in a statement. "We remain grounded, however, given challenging industry and economic conditions."

Ford's year-over-year sales drop was the smallest of the six largest automakers. General Motors Corp. sales slid 33.4 percent despite incentives and discounts on its Pontiac brand, while Toyota Motor Corp. sales were off 32 percent. Honda Motor Co. saw a 30 percent decline because of extremely strong small-car sales last June when gasoline was above $4 per gallon. Nissan Motor Co. reported a narrower decline than in previous months, down only 23 percent.

GM's decline improved when compared with previous months even though it entered Chapter 11 bankruptcy protection on June 1. GM plans to sell or close Pontiac, Saturn, Hummer and Saab to focus on four core brands -- Chevrolet, Cadillac, GMC and Buick.

At Chrysler, though, the company sold only 68,297 cars and trucks last month as it emerged from bankruptcy protection, and many of those were due to strong incentives of more than $4,800 per car, according to Edmunds.

Analysts predict that June sales, adjusted for seasonal variances and multiplied to determine an annual rate, could top the 10 million mark for the first time this year. During several months earlier in 2009, U.S. car and truck sales dropped to a rate of about 9 million vehicles, a huge reduction from more than 16 million as recently as 2007.

But any jump in the annual rate could be fueled by fire-sale prices at 789 Chrysler dealers that were fired by the company during the bankruptcy process and told to get rid of their inventory by June 9. Also, with GM dropping its Pontiac brand, incentives will rise on those models.

Toyota's top-selling Camry midsize sedan saw sales fall 37 percent while Corolla compact sales plunged 53 percent.

One bright spot for Toyota was its recently released third-generation Prius, which saw sales rise 10 percent. Prius sales had suffered in recent months as gas prices plunged from more than $4 per gallon last summer to below $2 a gallon in the winter.

Nissan's decline narrowed despite weaker sales of its top-selling Altima midsize sedan. The automaker sold 2,137 units of its boxy Nissan Cube in its first month of sales.

Dearborn, Michigan-based Ford 154,873 cars and light trucks last month, with strength in its midsize Fusion and the Flex crossover vehicle. That was still less than the 161,197 sold in May, traditionally a stronger sales month than June.

Chrysler said it sold only 68,297 vehicles last month, despite fire-sale prices at 789 dealerships that the company terminated.

Ford's surprisingly low decline came after a string of months in which it and other automakers reported year-over-year drops of more than 40 percent. Ford's sales were down 24 percent in May and off 37 percent for the first five months of the year.

Ford is the sole U.S. automaker to avoid bankruptcy protection and it's the only one not receiving government loans to keep from running out of money. GM and Chrysler are receiving billions in loans, and GM inching its way closer to escaping Chapter 11 bankruptcy, which allows a company to stay in operation under court protection while it sheds debts and unprofitable assets to emerge in a stronger financial position.

In anticipation of increased traffic at dealers and higher sales later in the year, Ford announced Monday that it would boost its third-quarter production by 25,000 vehicles.

AP Auto Writers Kimberly S. Johnson in Detroit, Stephen Manning in Washington and Dan Strumpf in New York contributed to this report.

[Dutchcedar]

U.S. car and truck sales showed signs of stabilizing in June after a year of sharp declines, but every major automaker except Honda Motor Co. reported lower sales than in May.

The only reason to read any further is to find out how 2 + 2 = 3.

As suspected, the numbers show down in black and white, while the up is shown with such great analysis as: "It is unlikely things will get any worse," said Jesse Toprak..."

Where have we heard that before?

[bk94si]

Stabilizing, as in went off a cliff and now bouncing around on the rocks at the bottom. This is a positive sign?