Feeble U.S. Car Sales Prompt Parts Maker Stock Downgrade

Weak sales figures for carmakers, which exacted a heavy toll on the Big Three on Monday, prompted a pre-market downgrade from Deutsche Bank.
Analyst Rod Lache lowered his assessment of Dow component General Motors, Ford, and auto parts makers Delphi and Visteon to “sell” from “hold,” citing increased pessimism on the risk to profitability for the auto industry over the next few years.
He believes the annual pace of price deflation could get worse, as demand weakens and foreign capacity increases.
“In fact, we believe the risk of a prolonged downturn, lasting through 2005, is greater than is commonly perceived,” Lache said in a note to clients.
Lache cut his price target on GM to $24 from $32, on Ford to $5 from $7.50, on Delphi to $6 from $8 and on Visteon to $4 from $8. All figures in U.S. dollars.
Merrill also weighed in on the auto stocks, saying that Monday’s sales figures “increase the likelihood of production cuts/slow downs in the near future.”