DETROIT (AP) - Shares of General Motors Corp. and Ford Motor Co., the two biggest U.S. automakers, declined Monday amid signs of disappointing February sales, high gasoline prices and downgrades by a Wall Street investment bank.
GM shares fell $1.24, or 3.4 percent, to close at $35.65, its lowest close since mid-2003, while Ford lost 35 cents, or 2.7 percent, to $12.65 on the New York Stock Exchange.
Ford's share price is near its 52-week low of $12.61.
Analysts have forecast disappointing sales for GM and Ford when major automakers report February tallies Tuesday.
Such results will most certainly play a part in GM and Ford announcing profit-eroding production cuts for the second quarter, following a course already taken in the first quarter.
Analysts at Banc of America Securities downgraded GM and Ford to "sell'' from "neutral'' on Monday, predicting continued market share losses for both companies.
The firm said the carmakers, despite new products, are saddled with lower resale values than rivals, a turnoff for many consumers.
Each also faces the same dilemma: Price hikes could exacerbate share losses, while price cuts could hurt earnings.
"Pressures of steel and oil prices are also likely to continue,'' the investment bank said.
GM and Ford both have warned of lower earnings in 2005 because of factors such as lower profits at their financial services arms and continued high health care expenses.
Repeating a pattern that has become all too familiar in recent months, GM and Ford are expected to report declines in business for February, while DaimlerChrysler AG's Chrysler Group and Asian brands such as Toyota Motor Corp. and Nissan Motor Co. are forecast to post increases, analysts say.
GM and Ford both got off to disappointing starts in January, which they pegged to harsh winter weather in much of the country and fallout from exceptionally strong December sales.
Demand in February appears to have been mixed, at best.
Ford Division President Steve Lyons said Monday the brand's overall sales will be down in February from a year ago, hurt by soft sales of big sport utility vehicles but lifted a bit by improving car sales.
Lyons said he was particularly encouraged by demand for three new vehicles that went on sale late last year - the Ford Five-Hundred and Mercury Montego full-size sedans and the Ford Freestyle crossover vehicle.
Lyons said the drop-off in demand for larger vehicles such as the Ford Explorer and Expedition SUVs is partly attributable to consumer concerns over fuel prices.
"People are looking at oil, and at $50 a barrel saying, 'I need to be concerned about this and what my future costs are,''' he said.
The average price of gasoline nationwide is $1.91 a gallon (3.8 liters), an increase of 21.7 cents from a year ago.
In 2004, the average price peaked above $2 a gallon in May, just before the start of the summer driving season.
To be just a dime short of that level in early February is not good news for motorists, according to analysts.
More than half the price of a gallon of gasoline is tied to the cost of crude oil, which has been rising worldwide due to tight supplies, strong demand and the declining value of the dollar.
At close to $52 a barrel, crude futures are trading about 43 percent higher than a year ago.
Despite the higher price, demand for gasoline is on the rise in the United States, averaging close to 8.9 million barrels a day over the past month, according to Energy Department statistics.
A year earlier, demand averaged 8.7 million barrels a day.
Merrill Lynch's John Casesa forecasts a seasonally adjusted annual sales rate of 16.4 million units in February, which would be up slightly from January's 16.2 million rate but off a notch from the 16.5 million rate of a year ago.
The rate indicates what sales would be for the full year if they remained at the same pace for all 12 months. Full-year sales for 2004 were about 17 million. - AP
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