The nation's two biggest auto makers, General Motors Corp. and Ford Motor Co., posted significant declines in earnings for the fourth quarter and the year, reflecting the softness in auto sales and their costly incentive programs for buyers. For the quarter, profits fell 49.9 percent at GM and 72.9 percent at Ford, the companies reported Thursday.
For the year, profits fell 13.2 percent at GM and 27.5 percent at Ford.
For the first time since 1985, General Motors' annual earnings outpaced those of Ford.
Weak profits are likely to continue through the current quarter as
automakers continue to offer hefty rebates on their products in order to sell them.
Analysts said Ford and General Motors lost money on North American
operations in the fourth quarter.
"Once we get beyond the first quarter we can look forward to better results," said Harvey Heinbach, an auto analyst for Merrill Lynch.
GM's fourth-quarter profit dropped to $700-million, or $1.01 a share, from $1.4-billion, or $2.12 a share, in the fourth quarter of 1988. Revenue fell 3.1 percent to $31.4-billion from $32.4-billion.
For the year, General Motors' income declined to $4.22-billion, or $6.33 a share, from $4.86-billion, or $7.17 a share. Revenue was $126.9-billion, the company's third-best year, up 2.7 percent from $123.6-billion in 1988.
At Ford, fourth-quarter income dropped to $314-million, or 68 cents a share, from $1.16-billion, or $2.42 a share, in the fourth quarter a year earlier. Revenue edged up to $24.1-billion, from $23.9-billion a year earlier.
The results include a one-time charge of $424.3-million, or 91 cents a share, to account for the previously announced sale of Ford's Rouge Steel subsidiary.
For the year, Ford's income dipped to $3.84-billion, or $8.22 a share, from $5.3-billion, or $10.96 a share, in 1988. Revenue rose 4 percent, to $96.1 billion, from $92.4-billion in 1988.
Chrysler Corp. reported Wednesday that it had a loss of $664-million in the fourth quarter and that profits fell 65.8 percent for the year.