Ford Motor Co. (F) said Wednesday its March U.S. sales dropped 40.9% from a year ago, hurt by sharp decline in vehicle demand amid mounting job losses and near record low consumer confidence.

The Dearborn, Michigan-based automaker said it sold 131,465 vehicles in March, down from 222,337 vehicles sold in the same month last year. For February, the automaker had reported a 48.4% drop in U.S. vehicle sales.

This marks the sixteenth consecutive decline of monthly U.S. sales for Ford.

Total sales of Ford, Lincoln and Mercury vehicles fell 41.3% to 125,107 units in March from 213,074 units a year ago. Volvo sales dropped 31.4% year over year to 6,358 units. Ford last week confirmed that it has held preliminary discussions with several parties interested in buying its loss-making Volvo Cars unit. Reports indicate that the company hopes to sell the unit for between $1 billion and $2 billion.

Ford said retail sales in March were down 36% compared with a year ago and fleet sales were down 50%.

In the Ford, Lincoln and Mercury brands, car sales fell 36.6% year over year to 46,467 units in March, while crossover utility vehicle sales, which include Ford Escape, Edge and Flex, dipped 35.9% to 27,195 units and SUV sales plunged 73.2% to 5,632 units. Truck and van sales slipped 40% to 45,813 units.

Even sales of the Focus, a hot-selling small car, fell 41.5% to 12,383 units in March, while sales of another fuel-efficient car Escape dropped 32.1% to 12,580 units.

Customer deliveries of Ford's newest products, the 2010 Ford Fusion and Mercury Milan, commenced in March.

Sales of Ford's F-Series truck, America's best selling vehicle for 32 years in a row, fell 39.9% to 32,728 units in March from 54,465 units in the same month last year. The lucrative truck market has been particularly hard hit by the continued downturn in the U.S. home-construction market.

Ford continues to align its production and inventories with demand. At the end of March, Ford, Lincoln and Mercury inventories totaled 408,000 units, down 27% from a year earlier that is in line with the sales decline during that period.

The automaker said it produced 349,000 vehicles in the first quarter, less 26,000 vehicles from the previous forecast.

Aligning production and inventory with demand is a key element of our strategy to strengthen our brand and improve customer value, Farley, Ford group vice president, Marketing and Communications. Our disciplined approach to the market in these challenging times helps us to minimize costly incentives that erode brand value while we're delivering our strongest-ever product lineup.

For the year to date period, Ford's U.S. vehicle sales dropped 43.2% to 324,371 units from 571,527 units sold in the same period last year.

Total sales of Ford, Lincoln and Mercury vehicles for the year to date period fell 43% to 311,747 units from 546,723 units in the prior year period. Volvo sales dropped 49.1% year over year to 12,624 units.

In an effort to boost customer confidence and jump-start vehicle sales, Ford on Tuesday launched its new Ford Advantage Plan, under which Ford will provide 12 months of payment protection of up to $700 per month on every new Ford, Lincoln or Mercury vehicle in case the customer loses his job The offer is valid for purchases from Tuesday through June 1.

The offer, which is in addition to zero-percent financing, come at a time when U.S. auto sales are at their lowest levels in at least 27 years under the pressure of tight credit and weak consumer confidence.

Rival GM, which is pushed to the brink of bankruptcy amid dwindling sales, higher operating costs and huge debts, also on Tuesday unveiled its GM Total Confidence plan, whereby customers can get payment protection for the first 24 months of ownership. GM will provide payment protection on vehicle loans or leases of up to nine payments of $500 a month for customers who lose jobs for economic reasons. The offer is available for vehicles purchased April 1 through April 30.

In January, Ford reported a wider $5.9 billion loss for the fourth quarter amid a sharp drop in global vehicle demand. The company also said it burned $5.5 billion in cash in the quarter and will tap a revolving credit line after posting its biggest-ever annual loss, while reiterating that it does not require a federal loan to fund its operations.

For the full year 2008, Ford reported a net loss of $14.6 billion, compared to a net loss of $2.7 billion for the full year 2007. Revenue for the full year 2008 fell to $146.3 billion from $172.5 billion in the previous year.

Ford is the only one of the Big Three U.S. automakers that didn't seek any government funding to survive.

GM and Chrysler are surviving on $17.4 billion of government loans and have requested for $21.6 billion more.

However, President Barack Obama said Monday the restructuring plans offered by GM and Chrysler do not go far enough to warrant additional government assistance and asked the two automakers to accelerate their survival efforts to access more funding or else face bankruptcy. GM was given 60 days to come up with a new restructuring plan in order to receive more federal aid, while Chrysler was given 30 days to complete a merger with Italy's Fiat because it was not considered viable as a stand-alone company.

Rick Wagoner resigned as GM CEO at the request of the Obama administration and was succeeded by the company's COO Fritz Henderson.

Among other automakers reporting U.S. sales Wednesday, Daimler AG (DAI) said U.S. sales by its Mercedes-Benz cars division fell 23% in March to 17,348 vehicles. The figure includes the car maker's Smart models. Mercedes-Benz USA March sales fell 25% to 15,602 vehicles. smart USA recorded 1,746 sales in March 2009.

Volkswagen of America Inc., a unit of Germany's Volkswagen AG, said its March sales fell 19.7% to 15,720 vehicles from 19,587 vehicles a year ago.

Ford shares are currently trading at $2.56, down 7 cents ir 2.68%.

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