DETROIT – A day after Chrysler LLC told a quarter of its dealers that it won’t renew their contracts, owners of General Motors Corp. dealerships are awaiting word on whether they will be next.

GM said it will notify 1,100 U.S. dealers on Friday that their franchise agreements will not be renewed. Dealers expect to hear either by telephone or FedEx letters that will begin arriving Friday morning.

GM spokeswoman Susan Garontakos said the company will not make public a list of dealers to be cut, leaving the decision to release information to individual business owners.

The company has scheduled a conference call for noon Friday to explain its dealer reduction strategy.

The cuts will come just a day after crosstown rival Chrysler announced it was dropping 789 of its roughly 3,200 dealerships by around June 9. Both companies have too many dealerships for too few sales are slashing costs as they race to restructure.

Dealers around the country nervously awaited news Friday morning, with some saying they were in the dark about how they would be notified. In Richmond, Va., Royal Chevrolet co-owner Del Mugford was slightly relieved when he sifted through FedEx packages Friday morning and hadn’t received any bad news from General Motors. But he knew his future could be determined by a phone call or a piece of mail.

“This is absolutely nerve wracking. It’s like a death sentence. It’s the worst feeling in the world,” said Mugford, 45, who bought the dealership with his younger brother in 2002 after owning an Oldsmobile franchise down the street. GM closed its Oldsmobile line of cars in 2004.

John Rogin, who owns a Buick dealership and GMC truck dealership in the Detroit area, was also awaiting word. But he said he’s not worrying. His Buick store, he said, has been among the top 10 performers in the country for 15 years.

“I’m just selling cars. I’m still a loyalist, and for the most part a purist as far as GM goes,” he said.

Many dealers, though, will fight the cuts in court, he said.

“Most of the dealer body realizes that just because you get a letter doesn’t mean it’s all over,” he said. “This company isn’t in bankruptcy.”

GM’s dealer cuts are part of the company’s plan announced last month to cut more than 2,600 dealers by 2010. The remaining cuts will come from closed Saturn and Hummer dealers, along with 400 dealers that the company expects will close voluntarily. Another 500 would be consolidated into other dealerships.

The GM dealer cuts are likely to have a much greater impact than Chrysler’s. While many Chrysler dealers also sell other brands and will stay open after losing their franchises, a large number of GM dealers sell only GM vehicles. So if their franchises are revoked, they run a greater risk of closing for good.

In both cases, the cuts will cost thousands of jobs, create holes in local tax bases, eliminate community pillars and create economic ripple effects across the country.

Chrysler is operating under bankruptcy protection, so it is likely to have an easier time tearing up its franchise agreements with its dealers than GM. A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York for the judge to determine whether to approve Chrysler’s motion to fire its dealers.

Chrysler executives said Thursday the company is trying to preserve its best-performing dealers and eliminate ones with the weakest sales. More than half of the dealerships being eliminated sell less than 100 vehicles per year, they said, and account for 14 percent of U.S. sales.

Chrysler has received $4 billion in government aid, while GM has received $15.4 billion. GM is continuing to restructure out of court and faces a government-imposed deadline of May 31 for doing so. Several difficult hurdles remain, and many experts say that it is all but inevitable that it will follow Chrysler into Chapter 11 bankruptcy.

To remake itself outside of court, GM must persuade its bondholders to swap $27 billion in debt for 10 percent of its risky stock. In addition, it must work out deals with its union, announce factory closures, cut or sell brands and shutter dealers.

Swapping its bond debt for equity may be its most difficult task. The company is trying to get 90 percent of its bondholders on board for the so-called debt-for-equity swap. A committee representing the bondholders has rejected the swap, saying it unfairly favors the government and the United Auto Workers union. They have counteroffered seeking a 58 percent ownership stake, which the automaker in turn rejected.

On Thursday, GM said that bankruptcy is possible if it doesn’t get enough takers on the exchange. If that happens, it likely would sell most of its assets to a new company and liquidate the rest, the automaker disclosed in a regulatory filing.

The automaker also says it could seek court approval of its reorganization plan even if creditors vote against it.

Shares of GM wobbled between $1.13 and $1.16 in morning trading Friday.

By Tom Krisher, Dan Strumpf

GM CEO Rick Wagoner: During his reign, the company profited from sales of trucks and SUVs - until gas prices spiked.

DETROIT – Time and time again, General Motors Corp.’s board of directors reaffirmed its support for Chairman and CEO Rick Wagoner, even as the company piled up billions of dollars in losses and begged for government loans to stay alive.

But Wagoner is now a high-profile casualty of government intervention, forced out as part of the Obama administration’s sweeping last-ditch effort to save the century-old auto giant.

Wagoner, 56, who spent 32 years with GM, stepped down effective immediately, the company said in a statement Monday. He was replaced by Fritz Henderson, the company’s vice chairman and chief operating officer.

GM board member Kent Kresa, a former chairman and CEO of Northrop Grumman Corp., was named interim chairman and said new directors will make up the majority of GM’s board when a new slate is nominated for election in August.

“The board has recognized for some time that the company’s restructuring will likely cause a significant change in the stockholders of the company and create the need for new directors with additional skills and experience,” Kresa said in a written statement.

GM shares tumbled 96 cents, or 26.5 percent, to $2.66 in morning trading Monday. That is down 89 percent from their 52-week high of $24.24 on April 30, 2008.

The management shake-up, according to several industry analysts, shows that the administration is serious about forcing GM to change more quickly and dramatically than it did during Wagoner’s nearly nine-year tenure as CEO.

Jeremy Anwyl, chief executive of the automotive Web site Edmunds.com, called the move “political theater” to appease an increasingly bailout-weary public.

“American taxpayers are not happy,” Anwyl said. “But this way you’re able to point to Rick and say he’s gone, and that creates an environment where the loans become politically palatable.”

By all accounts, Wagoner made progress in fixing GM. While CEO, he cut its U.S. work force from 177,000 to roughly 92,000 today.

Wagoner also closed factories; shed the unprofitable Oldsmobile brand; globalized GM’s engineering, manufacturing and design to save billions; and led a resurgence in quality and performance of its long-neglected cars.

In 2007, the company reached a landmark agreement with the United Auto Workers that shifted massive retiree health care costs to a union-run trust and ushered in a $14-per-hour wage for new hires, about half that of a current laborer.

But critics, including many members of Congress, say Wagoner moved too slowly, failing to cut enough of the company’s huge health care and pension costs, and relying too long on high-profit pickup trucks and SUVs as gas prices rose and the market shifted toward smaller vehicles.

In the past four years, GM has piled up $82 billion in losses.

Still, Wagoner had the company moving in the right direction, Anwyl said.

“Was he moving fast enough or bold enough? Obviously, in light of what we know today,” Anwyl said, “the answer would be no.”

While ousting Wagoner, the Obama administration made no management changes at Chrysler LLC, which also is getting government loans. Chairman and CEO Robert Nardelli has only been in charge there since August 2007.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said Wagoner’s departure probably will have little impact on GM’s restructuring efforts because Henderson was the heir-apparent in GM’s succession plans.

“I don’t think you would see any shift or significant change at all with Rick’s leaving. I think the course that they’re on, they’re on,” he said.

Wagoner became GM’s face to the public during a disastrous November appearance before Congress to request assistance. He was lampooned on NBC’s Saturday Night Live after being torn apart by lawmakers for flying to Washington in a corporate jet and offering vague, rambling answers to their questions.

“Given the history, a change in management could hardly hurt and might do some good,” Sen. Charles Schumer, D-N.Y., said Sunday.

Wagoner’s ouster came just before President Barack Obama planned to announce what Chrysler and GM must do to get government loans beyond the $17.4 billion they have already received.

Several senior administration officials said GM will get enough government aid to restructure over the next 60 days, while Chrysler will get up to $6 billion and 30 days to complete an alliance with Italian automaker Fiat SpA. If Chrysler fails to reach a deal with Fiat or another partner, the government won’t provide any further financing, likely sending the company into liquidation.

The officials spoke on condition of anonymity because they were not authorized to make the details public.

Wagoner, a former Duke University basketball player, joined GM in 1977, serving in several capacities in the U.S., Brazil and Europe. He became president and chief executive in 2000 and has served as chairman and CEO since May 2003.

In a December interview with The Associated Press, he declined to speculate on suggestions that he step down.

“I’m doing what I do because it adds a lot of value to the company,” Wagoner said. “It’s not clear to me that experience in this industry should be viewed as a negative, but I’m going to do what’s right for the company and I’ll do it in consultation with the (GM) board (of directors).”

Wagoner isn’t the first CEO to lose his job as part of a government bailout. The CEOs of mortgage giants Fannie Mae and Freddie Mac were forced out after the government took over the companies in the fall. Robert Willumstad, the former CEO of American International Group Inc., left the company in September.

GM cannot make severance payments to Wagoner or other senior executives under the terms of its governments loans. The company said in its annual report this month that Wagoner is eligible to retire under GM’s salaried employee and executive retirement plans, but the amount he would receive was unclear.

GM and Chrysler were required by the Bush administration to get major concessions from debtholders and the United Auto Workers, with a deadline of March 31 for signed contracts. But very little headway was made in the negotiations this weekend as the parties awaited Obama’s announcement.

Wagoner said in a statement early Monday that he was asked to “step aside” during a meeting with Obama administration officials on Friday, and he consented.

He called Henderson an excellent choice to lead the company and thanked employees around the world.

“GM is a great company with a storied history,” he said. “Ignore the doubters because I know it is also a company with a great future.”

WAGONER BIO

NAME: G. Richard “Rick” Wagoner Jr.

AGE: 56. Born Feb. 9, 1953, in Wilmington, Del., and raised in Richmond, Va.

EDUCATION: Bachelor’s degree in economics, Duke University, 1975; master’s degree in business administration, Harvard University, 1977.

PROFESSIONAL CAREER: General Motors Corp. chairman and chief executive officer, May 2003-present; GM president and CEO, 2000-2003; GM president and chief operating officer, 1998-2000; executive vice president and president of GM North America, 1994-1998; GM executive vice president and chief financial officer, 1992-1994; president and managing director of GM Brazil, 1991-1992; vice president in charge of finance for GM Europe, 1989-1990; worked for GM in Brazil and Canada, 1981-1989; joined GM as an analyst in the treasurer’s office, 1977.

AP Auto Writer Dan Strumpf reported from New York. Associated Press Writer Ken Thomas in Washington contributed to this report.

By Tom Krisher, Dan Strumpf

In a study released Thursday, British luxury carmaker Jaguar surged to the top of J.D. Power and Associates' closely watched vehicle dependability study this year, tying Buick for the No. 1 spot and dethroning Lexus for the first time since the Japanese luxury brand has been a part of the survey.

NEW YORK – British luxury carmaker Jaguar surged to the top of J.D. Power and Associates’ closely watched vehicle dependability study this year, tying Buick for the No. 1 spot and dethroning Lexus for the first time since the Japanese luxury brand has been a part of the survey.

Lexus, Toyota Motor Corp.’s luxury brand, took the next spot in the study released Thursday, followed by Toyota’s namesake brand, then Mercury, Infiniti and Acura.

“Buick and Jaguar both lead the industry in nameplate performance,” said Neal Oddes, director of product research and analysis at J.D. Power. “In terms of individual model performance, Lexus and Toyota still do very, very well.”

The annual study measures problems experienced by the original owners of vehicles after three years. Suzuki owners reported the most problems among the 37 brands assessed by J.D. Power.

Despite losing its crown to Jaguar and Buick, Lexus still swept top awards in four segments, while Toyota’s namesake brand took five awards. General Motors Corp.’s Buick LaCrosse was J.D. Power’s top midsize car, while Ford Motor Co.’s Lincoln brand took two awards. Chrysler LLC, which took no segment awards last year, won top honors for its Dodge Caravan in the van segment.

Jaguar’s sudden jump to the top from its No. 10 spot in 2008 was notable for a study that is fairly consistent from year to year. Oddes said the brand has made significant improvements across many areas.

“We see improvements all over the board with Jaguar,” Oddes said, citing fewer reported problems with vehicle exterior, sound system and the overall driving experience. “The improvement at a nameplate level is significant.”

Still, Jaguar, which Indian car giant Tata Motors Ltd. bought from Ford in 2007, remains a relatively small-volume brand in the U.S. It sold just 14,000 vehicles here in 2008, while Buick sold 128,000.

Oddes said this year’s study was redesigned to exclude routine fixes from a vehicle’s list of problems. For example, the study no longer counts tire or windshield wiper replacements as a reportable problem. The intended result is a study that focuses on actual glitches with a vehicle, Oddes said, though it also makes it difficult to make year-over-year comparisons.

“We cleaned up the survey to really try to focus in on things that are truly broken,” he said.

The industry average was 170 problems per 100 vehicles, or somewhat less than two problems per vehicle. Last year, the industry average was 206 problems per 100 vehicles, but year-over-year improvements this year are much less pronounced when accounting for the changes in the study’s methodology, Oddes said.

The most frequently reported problem was wind noise, followed by brake noise, peeling paint, brake vibrations and problems with a vehicle’s lights, Oddes said. The problems have been fairly consistent from year to year, he said.

J.D. Power’s dependability study surveyed 46,313 original owners of 2006 model-year vehicles in October 2008. The results are watched closely by automakers and are often used in advertising. Owners’ opinion of a car after three years can be a major influence on their opinion to buy that brand again.

The firm also releases an initial quality study, which measures problems in the first 90 days of ownership.

———

JD POWER RANKINGS

J.D. Power and Associates on Thursday released its annual survey of vehicle dependability based on questionnaires sent to owners of 2006 model-year vehicles.

The list includes the top performers and runners-up in each category. An MAV, or multi-activity vehicle, refers to sport utility vehicles and crossovers.

Subcompact Car

• Highest ranked: Scion xA

• Runners-up: Suzuki Aerio, Chevrolet Aveo

0Compact Car

• Highest ranked: Toyota Prius

• Runners-up: Toyota Matrix, Pontiac Vibe

Compact Sporty Car

• Highest ranked: Mazda MX-5 Miata

• Runners-up: Subaru Impreza, Pontiac Solstice Convertible

Midsize Sporty Car

• Highest ranked: Toyota Solara

• Runners-up: Chevrolet Monte Carlo, Ford Mustang

Midsize Car

• Highest ranked: Buick LaCrosse

• Runners-up: Toyota Camry, Mercury Milan

Large Car

• Highest ranked: Mercury Grand Marquis

• Runners-up: Buick Lucerne, Mercury Montego

Compact Premium Sporty Car

• Highest ranked: Nissan 350Z

• Runners-up: Mercedes-Benz SLK-Class, Acura RSX

Entry Premium Vehicle

• Highest ranked: Lincoln Zephyr

• Runners-up: Cadillac CTS, Infiniti G-Series

Midsize Premium Car

• Highest ranked: Acura RL, Lexus ES330 (tie)

• Runner-up: Infiniti M-Series

Large Premium Car

• Highest ranked: Lexus LS430

• Runners-up: Lincoln Town Car, Cadillac DTS

Premium Sporty Car

• Highest ranked: Lexus SC 430

• Runners-up: Porsche 911, Chevrolet Corvette

Compact MAV

• Highest ranked: Honda Element

• Runners-up: Honda CR-V, Mitsubishi Outlander

Midsize MAV

• Highest ranked: Toyota Highlander

• Runners-up: Toyota 4Runner, Buick Rainier

Large MAV

• Highest ranked: Toyota Sequoia

• Runners-up: Chevrolet Tahoe, Ford Expedition

Large Pickup

• Highest ranked: Toyota Tundra

• Runners-up: Ford F-150 LD, GMC Sierra LD

Midsize Pickup

• Highest ranked: Ford Ranger

• Runners-up: Honda Ridgeline, Toyota Tacoma

Van

• Highest ranked: Dodge Caravan

• Runners-up: Ford Freestar, Toyota Sienna

Midsize Premium MAV

• Highest ranked: Lexus GX 470

• Runners-up: Acura MDX, Lexus RX 330/RX400h

Large Premium MAV

• Highest ranked: Lincoln Mark LT

• Runners-up: Land Rover Range Rover Sport, Lincoln Navigator

The Associated Press

NEW YORK – Toyota said Wednesday it will recall almost 1.3 million vehicles worldwide due to a defect that could cause a foam pad near the seat belt to ignite during collisions.

The Japanese automaker said the recall includes 134,900 model-year 2006 and 2007 Yaris subcompacts that were sold in the U.S. Toyota Motor Sales USA said it is working with the National Highway Traffic Safety Administration to recall the vehicles.

Toyota spokesman Brian R. Lyons said in “severe front-end collisions,” the mechanism that tightens the vehicle’s seat belt expels a gas that could cause a sound-insulating foam pad nearby to ignite. In a worst-case scenario, the problem could cause a fire, he said.

However, Lyons said no cases of either have been reported where this actually happened in the U.S., and no other vehicles are affected.

The recall affects about 1.28 million vehicles worldwide that are based on Toyota’s Yaris platform. Elsewhere, the car is sold as the Vitz and the Ractis. Lyons could not comment on whether problems related to defect have been reported outside the U.S.

Toyota Motor Sales USA will mail letters to consumers who own the affected cars next week, Lyons said. Toyota will pay the cost of the repair, which should take an hour at a Toyota dealer, he said.

U.S.-traded shares of Toyota rose $1.53, or 2.3 percent, to $67.83. Shares of Toyota are flat since the start of the year. The automaker, along with the rest of the industry, reports U.S. sales on Tuesday.

Dealers wait to tour Winnebago's just-unveiled Class A Via Concept vehicle that's expected to get 15 miles per gallon at the Recreational Vehicle Industry Association's 46th Annual National RV Trade Show in Louisville, Ky.

LOUISVILLE, Ky. – Under the gloom of plunging motor home sales and with travel trailers stacking up on lots, recreational vehicle makers and dealers at their national trade show this week tried to lift their spirits by joining in song.

“You gotta have heart,” they sang at the kickoff breakfast, trying to stay resilient in an industry that’s hit a big speed bump. The swooning economy and a credit crisis that makes it tougher to finance a six-figure purchase are keeping potential RV buyers off the road.

“These are ugly times,” said Richard Coon, president of the Virginia-based Recreation Vehicle Industry Association. “I’ve seen lots of downtrodden faces, and for good reason.”

RV companies showcased their newest models at the industry event Tuesday through Thursday, including hybrids and slimmed-down motor homes touted as more energy friendly. Now the trick is to lure skittish customers to dealers’ lots.

Sideswiped by the U.S. economic downturn, robust RV sales earlier in the decade have given way to lean times for the industry.

Through October, shipments from RV companies to dealers for the year fell 27 percent from the comparable period in 2007, according to RVIA. The downturn is expected to stretch into 2009, when shipments are forecast at 186,800 units, about 25 percent lower than this year’s projected total of 248,000, according to the association, citing statistics from Richard Curtin, director of consumer surveys at the University of Michigan.

“This industry is in the middle of a three-year downturn, and you can really probably even date it farther back than that,” said Kathryn Thompson, who follows RV companies for Avondale Partners.

At the height of the industry’s upturn this decade, shipments totaled 390,500 units in 2006. But those are now fond memories for manufacturers and dealers feeling the economic pinch.

Larry Troutt, an RV dealer in the Houston suburb of Waller, said his sales are down about 20 percent from last year. Customers are still checking out his stock and he’s still making deals, but a larger percentage of his inventory has been stuck on his lot.

“Right now, my sales manager has my approval to sell anything that’s close to a year old for what we paid for it,” said Troutt, who has a couple hundred units on his lot.

Tom Stewart, a retired oil company employee who heads an RV owners club outside Seattle, said he’s noticed the effect of the tough economy. The club’s members are taking shorter trips to save on gas, he said. And he’s looked for ways to save money on the RV trips he takes with his wife.

“We’re doing a lot more inexpensive overnighters, looking at the free RV parking,” he said. “If we’re en route to a stop, rather than pull in to an RV park with full hookups and pay $25, $30 a night, we have lots of casinos out here that welcome RVs, and we’ll use those.”

Expensive, “discretionary” items like RVs are often the most vulnerable to the downturn because they are easy to put off.

Towable RVs, affixed onto pickups or hitched to the back of another vehicle, run between $4,000 and $100,000, according to the RVIA.

Standalone motor homes can start at around $41,000 for van-like “Type B” RVs, according to the industry trade group, while spacious, bus-like “Type A” vehicles run as much as $400,000 for top-of-the-line models.

Meanwhile, the summer’s run-up in fuel prices have also dissuaded customers from plunking down money on the fuel-swilling vehicles. Type A RVs typically get between 8 and 12 miles per gallon, according to RVIA spokesman Kevin Broom. Type B and Type C vehicles are more fuel efficient, with some models getting as much as 20 mpg, Broom said.

Although gas prices have fallen more than 56 percent from their summer highs, RV sales have not picked up, Thompson notes.

“The No. 1 thing we need right now is consumer confidence and the restoration of credit,” she said.

At the trade show, RV manufacturers Winnebago Industries Inc. and Fleetwood Enterprises Inc. unveiled diesel-electric hybrid concepts expected to improve fuel efficiency by more than 40 percent.

“We know that the RV of the future must incorporate advanced technologies to remain relevant and viable in a changing world,” said Paul Eskritt, president of Fleetwood’s RV group.

Dutchmen Manufacturing Inc., a unit of Thor Industries Inc., showed off its EcoLogic, an 18-foot towable trailer whose walls, floor and roof are made of thermal plastic rather than wood, making it lighter.

But the optimism around new model rollouts comes amid a dour climate for the industry.

In the past 12 months, 45 of about 2,850 RV dealerships around the country have closed, according to the Recreation Vehicle Dealers Association.

RV makers, meanwhile, have reported dismal financial results and are closing factories. Last week, Fleetwood, based in Riverside, Calif., posted a $57 million quarterly loss and said it would close eight plants and lay off 760 workers.

Coburg, Ore.-based Monaco Coach Inc. said it will slash white-collar salaries between 20 percent and 40 percent. The company plans to close three plants in Indiana and slash its motor home production in half.

Eskritt predicted the industry will weather the downturn because the “RV lifestyle is not going away.”

“People will always enjoy the great outdoors,” he said. “Owning a motor home, travel trailer or fifth wheel has become a part of the American dream.”

AP Auto Writer Dan Strumpf reported from New York.

By Bruce Schreiner, Dan Strumpf

The Nissan Murano is one of the vehicles included in the 0 percent financing offer.

NEW YORK – Nissan Motor Co. said Friday it will begin offering zero-percent financing for five of its top-selling vehicles starting next week as it seeks to lift its U.S. sales and prove to consumers that credit remains available.

Nissan’s North American unit will offer the 36-month financing program on its Rogue and Murano crossovers, its Altima and Sentra sedans and its Versa hatchback from Nov. 4 to Jan. 5.

Al Castignetti, vice president and general manager of Nissan North America’s Nissan division, said the deal marks the first time Nissan has offered zero-percent financing on so many models for such a long period.

“It was not about offering zero-percent on our least-popular models,” he said. “It was about having a real deal on the most popular vehicles that we sell, and if you’re serious about this … then you bring it on your best-moving product.”

Nissan also unveiled a 2009 Versa sedan with a 1.6-liter engine, touting it as the lowest-priced new car in the U.S. The car, which gets up to 34 miles per gallon on the highway, goes on sale Nov. 18 with a manufacturer’s suggested retail price of $9,990.

Nissan, the No. 3 Japanese automaker, is the latest company to offer zero-percent financing, a popular incentive typically used by automakers to drum up sales during slow periods. Toyota Motor Corp. launched its own unprecedented zero-percent financing deal this month after its U.S. sales fell 32 percent in September, when U.S. sales industrywide hit their lowest level in 15 years.

Nissan’s sales, though down modestly for the year, plunged 39 percent last month, and the five models in its latest financing deal took a serious hit. Altima sales tumbled to 43 percent in September, according to Autodata Corp., while Murano sales sank 16 percent.

The Rogue, however, has been one of Nissan’s most popular vehicles since it debuted late last year.

Nissan’s financing offer is another sign that Asian automakers, though holding up much better in the depressed U.S. vehicle market than their Detroit-based counterparts, are not immune to the tough market. Toyota is counting on its incentive program to lift its sales figures in October, and Nissan is now betting on a similar boost.

“One of the biggest obstacles to improving sales right now is vehicle financing, because consumers don’t feel like you can get a loan,” said Rebecca Lindland, an auto analyst with the consulting company Global Insight. “So getting the word out that there is in fact financing available is vital to improving sales.”

Automakers are scheduled to report October U.S. sales on Monday, and analysts widely expect yet another month of sharply lower volumes.

“We’re going to see an absolutely terrible October,” Lindland said.

Nissan declined to disclose the credit requirements for its new incentive because a number of factors go into determining whether to approve financing.

“We understand the challenges in the market, and this program is designed to help people from various credit levels, if you will, but we’re just not comfortable providing specifics on that,” spokesman Darryll Harrison said.

On Friday, Tokyo-based Nissan reported a 39 percent drop in its fiscal second-quarter profit. The company also cut its earnings forecast for the year, and attributed the results to the difficult U.S. market and a stronger yen, which drives up the price of the vehicles it exports.

In the U.S., the difficult auto market, caused by the battered economy, slumping consumer confidence and tight credit markets, has led some automakers to curtail vehicle leasing and other financing. In August, Chrysler LLC said it was getting out of the leasing business altogether. Earlier this month, General Motors Corp.’s lending arm, GMAC LLC, said it would limit its lending to buyers with credit scores of at least 700.

Nissan, for its part, said it remains committed to leasing for its entire portfolio of vehicles.

“We will continue the message that we have not exited leasing,” Castignetti said.

NEW YORK – Toyota Motor Corp.’s Scion brand topped the list of most reliable cars in Consumer Reports’ annual vehicle reliability rankings released Thursday, as Asian automakers continued to crowd the top of the magazine’s rankings.

Meanwhile, Chrysler LLC vehicles saw their scores fall sharply from 2007, while Ford Motor Co.’s nameplates gained ground over their Detroit rivals.

“Scion has a portfolio of three fairly small, fairly well equipped vehicles,” said David Champion, director of Consumer Reports’ auto test center. “It’s a basic form of transport, but put together well.”

The study compiled responses from Consumer Reports readers for more than 1.4 million vehicles this spring, using the results to predict reliability of 2009 models. The results are closely watched by automakers because of their influence on car buyers.

In this year’s study, Honda Motor Co.’s Acura and Honda lines ranked right behind Scion, followed by the Toyota nameplate and Toyota’s luxury brand, Lexus. Asian names occupied all of the magazine’s top 10 slots, with a domestic automaker not appearing on the list until No. 11 with Ford Motor Co.’s Lincoln brand.

Toyota spokesman Xavier Dominicis said Toyota was pleased to see Scion — which just launched two 2008 models, the xB and the xD — top the list.

“Generally speaking, when a vehicle first launches, that’s when you’re more apt to have any issues that need to be worked out, and this is a vehicle that came right out of the gate and earned this praise right away,” Dominicis said.

Champion noted that Ford nameplates have pulled ahead of their Detroit rivals this year, with nearly all Ford products carrying average-or-better rankings, with the exception of some of its truck-based vehicles. In addition, the Ford Focus sedan has been vastly improved since its 2000 debut, Consumer Reports said, and the car was ranked No. 4 for most reliable family vehicles.

“Ford’s vehicles, especially their car-based vehicles, have all been exceptionally good in terms of reliability year after year,” Champion said.

Mark Fields, Ford’s president of the Americas, said the rankings are further affirmation of the changes the company has made to improve its vehicles, particularly in drive quality, electrical function and quietness.

“Being neck and neck with Toyota and Honda is satisfying for us,” Fields said. But he added that topping General Motors Corp. and Chrysler LLC isn’t enough. “We have our eye squarely on becoming the leader in the industry.”

Consumer Reports called GM cars a “mixed bag,” with bright spots being the redesigned above-average Chevrolet Malibu. The Buick Lucerne V-8 and Pontiac G6 are also came in above average, but a quarter of GM models came in below average.

Chrysler vehicles, on the other hand, clustered near the bottom of the rankings, with nearly two-thirds of its lineup below average. The Chrysler Sebring was Consumer Reports’ worst-rated car, coming in at 283 percent below average.

“I believe the introduction of some of their new models were not fully developed, and they hadn’t worked out all the bugs before they came up,” Champion said.

He said recent changes at Chrysler may have contributed to poor quality ratings. Germany’s Daimler AG sold an 80.1 percent stake in Chrysler to private equity firm Cerberus Capital Management LP last year. Now, Cerberus appears to be in talks to sell the automaker, possibly to GM.

Chrysler spokeswoman Beverly Thacker said the automaker was dissatisfied with its performance and will work “aggressively to improve every aspect of customer satisfaction.”

“We do have pockets of success that demonstrates we can meet our customers’ expectations,” Thacker said in a statement. “The Dodge Caliber and Jeep Patriot were rated above average.”

To calculate its reliability ratings, Consumer Reports averages the overall reliability scores from readers for the most recent three model years. If a model has fewer than three model years, than it uses data from as many years as are available.

Consumer Reports’ reliability issue is scheduled to hit newsstands Nov. 11. The magazine is published by the nonprofit Consumers Union, based in Yonkers, N.Y.

NEW YORK – New vehicle prices are falling at the fastest rate ever recorded, a team of analysts said Thursday, squeezing automakers’ profit margins at a time of slumping sales but setting the stage for a sales rebound once the economy improves.

JPMorgan auto analyst Himanshu Patel and economic analyst Marc Levinson said in a research report that the average price of a new vehicle in the second quarter fell 2.3 percent from a year earlier to $25,632, citing government data. That’s the steepest drop recorded in the bank’s 41-year-old survey, the analysts said.

The price drop comes as automakers are already cope with mounting losses, declining sales and a shift away from high-margin trucks and sport utility vehicles toward lower-priced cars.

Although vehicle sales are expected to remain weak in the near term, the analysts said, the price decline is leading to better affordability and could translate into a big recovery for auto sales by the second half of 2009.

“If the labor market begins to improve in the second half of 2009 … buyers returning to the vehicle market may find the costs of owning a new vehicle to be unusually attractive,” Patel and Levinson wrote.

The analysts attributed the decline in average price to two factors. First, demand among consumers has shifted from trucks to less-expensive cars due to the run-up in gas prices, they said. Truck-based vehicles like pickups, minivans and SUVs accounted for less than half of all sales in the second quarter for the first time since 2001, they said.

Second, consumers are trading down within both the car and light truck categories to cheaper, more fuel-efficient models overall, they said.

The result is that the average new vehicle now costs less than 40 percent of an average household’s median annual income, the analysts said, whereas from 1991 to 2007, it would cost more than half of the median income.

“Vehicles have become much more affordable to average consumers,” they wrote.

The findings come a day after nearly every major automaker reported a drop in U.S. sales for August. Total U.S. auto sales fell 16 percent in August from a year ago and are down 11 percent so far this year.

Mark LaNeve, General Motors Corp.’s vice president of North American sales, said in a conference call Wednesday the automaker’s average new vehicle price fell $300 to $400 year-over-year in August, though it rose $1,000 compared with July.

GM’s August sales declined 20 percent but improved 31 percent over July’s totals. Much of the gain came from GM’s recent promotion offering employee discounts for everyone on many models.

“People were buying a richer mix of vehicles, and certainly we increased relative to ourselves in July and relative to the industry,” LaNeve said.

Ford Motor Co.’s August sales declined 27 percent, while Chrysler posted the biggest decline among the major automakers at 34 percent.

NEW YORK – U.S. car buyers are growing less satisfied with their purchases from domestic automakers while their Asian and European competitors continue to improve, according to a recent survey.

Consumer satisfaction with U.S. auto brands slipped as Lexus and BMW tied for first place, followed by Toyota and Honda, according to the University of Michigan’s American Customer Satisfaction Index released Tuesday.

General Motors Corp.’s Buick and Cadillac brands, and Ford Motor Co.’s Lincoln and Mercury lines, fell from their No. 2 perch at a time when U.S. companies are struggling to outshine their competitors and reverse their shrinking sales and market share.

That’s an unsettling sign for domestic automakers, said Claes Fornell, the University of Michigan business professor who heads the annual survey. Traditionally, U.S. brands improve their customer satisfaction scores each year, just not as much as their overseas counterparts. Now, the domestic companies’ ratings are declining while their competitors’ scores continue to climb.

“This is somewhat of a double whammy here,” Fornell said. “The struggling companies are getting an even tougher road in the near future. The question also is do they really have the resources, the cash here” to adapt.

Still, the auto industry has maintained a good reputation overall.

Customer satisfaction has increased steadily over time and its overall score of 82 — unchanged from the high set a year ago — is higher than many other industries the index tracks.

In addition, just 11 points separate the best-scoring brand from the worst, but domestic automakers are having the hardest time adapting to high gas prices and a shift in demand toward more fuel efficient vehicles, and that is manifesting itself in weaker customer satisfaction, Fornell said.

“I think there is little question that the domestic automakers are somewhat strapped for resources, and they have to go out and borrow money and stuff like that,” he said. “Whenever they have to do that, it is difficult to come up with the same level of quality and the same level of customer satisfaction.”

Asian and European automakers crowded the upper end of the rankings. BMW gained one point to score 87, tying Toyota Motor Corp.’s Lexus luxury brand, which held the top spot alone last year. Toyota’s namesake brand and fellow Japanese automaker Honda Motor Co. both rose two points to 86.

Several U.S. brands, by contrast, saw their ratings slump. Buick and Cadillac fell a point to a score of 85, while Chevrolet slipped three points to 79. GM’s Saturn brand, however, jumped four points to 85, which Fornell said was largely due to the brand’s better fuel economy.

Lincoln and Mercury lost three points to 83 in the study, while the score for Ford’s namesake brand was unchanged at 80.

GM spokeswoman Janine Fruehan said the company had not been given the survey data, but added the results appear to contradict other, more positive reports from outside GM about its customer satisfaction.

As the automaker looks at its own performance data along with external measures “our customer satisfaction is quite high,” Fruehan said.

Ford spokesman Mark Schirmer also said the survey appeared to run counter to other studies, but noted that Lincoln and Mercury continued to place above the industry average.

“We’re seeing very good improvement … in the past few years with Lincoln and Mercury in a number of surveys,” he said. “We’re working very hard and we’re getting good results to improve customer satisfaction.

Chrysler LLC’s brands fared the worst among the domestic automakers. Its Dodge and Jeep lines sat at the bottom of the 22-brand ranking, while its namesake brand shared the fifth-to-last spot with Ford. All of Chrysler’s ratings came in below the average rating.

“We’re making the necessary changes to ensure customer satisfaction for our Chrysler Jeep and Dodge brands,” Chrysler spokesman Ed Saenz said. “We think that soon we’ll see the same success in external metrics that we’re already seeing in internal metrics.”

The telephone survey asked 5,500 people who bought cars within the past three years how their satisfaction level compared with expectations, how their vehicle compares with the ideal vehicle, and their overall satisfaction level, on a scale of zero to 100.

The survey’s margin of error is about two points for each car maker, Fornell said.