As the global financial crisis continues to wreak havoc on economic markets around the world, the US auto industry is facing an increasingly untenable position. Industry earnings reports released Monday November 3, revealed the lowest sales numbers in nearly 26 years.

Reports released by Autodata Corp. and Ward's AutoInfoBank, showed that for the month of October US auto makers sold approximately 838,156 vehicles, a 32% reduction from October 2007. The annual sales rate was also the lowest since February 1983, at 10.6 million vehicles. In contrast, annual sales in 2007 were 16.1 million.

At the core of the problem, as with many other aspects of the present financial crisis, is the credit crunch. In spite of extremely low consumer confidence numbers, the issue is not a lack of customers, but a lack of ability to secure financing. Lenders are reluctant to provide loans even to customers with better than average credit ratings.

Sales of new vehicles have also been disrupted by uncertainty over the price of gas.

Hardest hit of the so-called "Big Three" US auto makers is Detroit based General Motors (GM). A continued drop in sales has caused the beleaguered manufacturer to spend nearly $1 billion since mid-2008 to try to keep its head above water. Adding to its distress are the October numbers that show a 45% decrease in sales.

Like other troubled industries, GM has recently turned to the federal government for help, recently requesting a $10 billion loan. While the Treasury Department declined their request, Congress recently passed a bill allocating $25 billion for low-interest loans from the US Energy Department to assist in the facilitation of fuel efficient vehicles.

GM's US competitors are also facing increasing difficulties. The October reports revealed that Ford saw a 30.2% decrease in sales, while Chrysler saw its own fortunes drop by nearly 35%.

Due to the important economic impact of the auto industry in states where production facilities are located, the Governors of 6 affected states have letters to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke pleading for federal aid.

"We urge you to use your broad regulatory authority to ensure that your continued regulatory actions help promote liquidity within the auto industry," the letter stated.

Led by Michigan Governor Jennifer Granholm, the state chief executives have tried to press the point that more is needed beyond the $25 billion loan package. In spite of this and the October numbers, it was not clear if the federal government would direct any funds from the recently approved $700 billion aid package to help the industry.

In an attempt to stave of disaster, GM is currently in merger talks with Chrysler. If the merger were to go through, half of Chrysler's plants could close resulting in the further loss of some 74,000 jobs.