While some analysts think the banking and finance sectors are still the problem, the fact is they are now in the rescue queue, if they need help from the $US700 billion fund. Interest rates are falling and credit is starting to flow.
The car sector though is facing at least one, perhaps two major failures (GM and Chrysler) in the next year, if sales and earnings don't improve soon, or Government help appear on the horizon.
According to the Autodata research group, total US new vehicle sales plunged a huge 32% to 838,156, compared with over 1.2 million in October 2007.
That's an annual rate of 10.56 million units, down from 16.04 million a year earlier and the annual rate of 12.5 million in September.
AutoData said the last time car sales hit a seasonally adjusted rate seen in October was back in early 1983.
While sales for all Asia-based companies fell 27%, combined market share for Japanese and South Korean brands rose 3.3 percentage points to 44.4%.
Apart from GM's misery, Ford reported a 30% drop in car and light- truck sales from a year earlier Toyota declined as did Honda's Nissan's and Chrysler's fell 35% compared with October 2007.
The news came the same day as a survey was released showing that US manufacturing fell to its lowest level in decades last month; part of a global trend that saw manufacturing in Australia, China and Europe worsen in the same month.
In fact while car sales were the worst in 25 years, US manufacturing fell to a 26 year low, thanks to the slump led by the automotive sector.
And overnight US factory orders fell 3.7% in September, a bigger than expected drop and a further sign of the slump hitting the huge American manufacturing sector.
The plunge in car sales came despite further falls in the cost of petrol, now down 41% from the peak of $US4.11 a gallon and trading around $US2.46 a gallon.
GM's sales plunge exceeded those worrying falls from other major producers, Ford, Toyota, Chrysler and Nissan.
Ford, the second-biggest U.S. automaker, said in a statement that its sales declined 30% from a year earlier. Toyota posted a 23% drop, and Nissan's slid 33%. Honda saw its sales fall by almost 29,000, or just over a quarter, to 85,864 units, a result that was 'good' compared to the competition.
Chrysler which includes the Chrysler, Dodge and Jeep brands posted a 35% drop in sales and was one of the few automakers to report a rise in sales from September.
Chrysler sold 94,530 vehicles, a drop from 145,316 a year earlier.
Ford's sales dropped to 132,838 cars and trucks, from 190,195 a year earlier. The fall was Ford's 23rd in the past 24 months. Ford is expected to release its third quarter results this Friday.
Toyota reported sales of 152,101 vehicles, down from 197,592 a year earlier. Adjusted for the change in sales days from a year earlier, the decline was 26%, Toyota said.
Nissan's sales fell to 56,945 vehicles.
Hyundai of South Korea reported a 31% drop in sales, Kia a Hyundai affiliate, saw sales drop 39%; Mazda suffered a 26% fall, Subaru, 14%. But it's the only Asian car group whose sales are up in 2008 at just 2.1% ahead.
Mitsubishi Motors Corp experienced a 19%; Suzuki's fell 47% for the second month in a row.
GM's fall stunned US analysts and the company, as the company's North American marketing boss, Mark LaNeve said in the company's statement:
"The carnage was completely widespread'' in the industry, he said on a conference call."In my 27 years, I never saw a month like this.''
In the company's statement he said: "If you adjust for population growth, this is probably the worst industry sales month in the post-WWII era,"
"The market has been shrinking for three years, but in October we saw a dramatic decline for the industry and GM."
"More importantly, it also reflects an unprecedented credit crunch that is dramatically impacting the entire U.S. economy – from the housing market to big and small companies to banks to family run businesses.
The credit freeze has also had a very negative impact on consumers' confidence and their purchase behavior across America."
"We believe there is considerable pent-up demand from the last three years, but until the credit markets open up and consumer confidence improves, the entire U.S. economy, and any industry like autos that relies on financing, will suffer.
"General Motors dealers in the United States delivered 170,585 vehicles in October, down 45 percent compared with a year ago.
"GM truck sales of 97,119 were down 51 percent and car sales of 73,466 were off 34 percent.
"The steep decline in vehicle sales was largely due to a significant drop in the market's retail demand as uncertainty over the deepening credit crisis impacted consumer confidence."
GM's performance will add pressure to complete a merger with Chrysler, which has suspended talks with the Nissan/Renault group of Japan and France.
But US media reports yesterday suggested that the American Government has rejected approaches from GM to finance part of all or the merger by way of loans from the $US700 billion bailout fund.
That's now the problem for the new President and Administration. GM, Ford and Chrysler have already got access to $US25 billion in low cost loans to upgrade factories and models to make them more efficient and greener, but that money won't start flowing until well into 2009.
GM has to hold back around $US11 billion in working capital, so that leaves around $10 billion left, or 8-10 months of cash at the current 'burn'.
Takeover Chrysler and closing it and revamping the finance arm of it and GMAC will cost several billion, while it will take an estimated $US1 billion to buyout the Chrysler dealer network.
Then there's the cost of health and pension benefits of all the current and former Chrysler employees, which will add to those huge costs already on GM's balance sheet.
