Bloomberg.com: Worldwide

By Alan Bjerga

Aug. 12 (Bloomberg) -- Corn and soybean crops in the U.S., the world's largest producer, avoided the damage investors anticipated in June from the worst flooding in 15 years as ``ideal'' weather helped plants recover, the government said.

The corn crop will be the second-biggest ever and the soybean harvest will be the fourth-largest, the U.S. Department of Agriculture said today in a report. Cash prices for both commodities will be lower than forecast last month, the USDA said, helping to keep food inflation in check.

The USDA's forecast for higher corn yields ``was a surprise and suggests the crops were never as bad as people thought back in the middle of the June flooding,'' said Chad Henderson, a market analyst for Prime Agricultural Consultants in Brookfield, Wisconsin. ``Both corn and soybeans will need an extended growing season'' to reach full potential, he said.

The floods sent crop prices surging, fueling concerns food prices would soar. Corn reached a record in late June, more than doubling from a year earlier, and soybeans touched an all- time high of $16.3675 a bushel on July 3, jumping 92 percent in 12 months. Since then, both commodities have plunged.

The USDA predicted a corn crop of 12.288 billion bushels, based partly on surveys of farmers in flood-affected states during July and August, after the waters receded. That's up 4.9 percent from last month's forecast. The soybean harvest will total 2.973 billion bushels, the USDA said, down just 0.1 percent from the month-ago projection.

Corn, Soybean Futures

Corn yields will rise to 155 bushels an acre, 4.4 percent more than estimated in July, the department said.

The corn-crop forecast is a ``negative number for the market,'' said Greg Grow, director of agribusiness for Archer Financial Services in Chicago. ``Buyers will wait for lower prices closer to harvest before increasing coverage.''

Corn futures for December delivery rose 2.5 cents, or 0.5 percent, to $5.195 a bushel at 12:04 p.m. on the Chicago Board of Trade, after earlier falling as much as 2.4 percent. Before today, the most-active contract had dropped 35 percent from the record high of $7.9925 a bushel on expectations that the flood damage was not as bad as first thought.

Soybean futures for November delivery rose 13.5 cents, or 1.1 percent, to $12.095 a bushel in Chicago. Yesterday, the price at one point touched $11.68, the lowest since April 1. The most-active contract before today had dropped 27 percent since reaching the record.

Cash Prices

The USDA reduced its estimates for cash prices for both crops in the marketing year that starts Sept. 1. Corn will average $5.40 a bushel, down from $6 projected in July, while soybeans will sell for about $12.25 a bushel, down from the month-ago estimate of $12.75.

The June floods killed at least 24 people and inundated more than 3.4 million acres. Crops were destroyed in waterlogged fields, threatening to increase food prices already forecast by the USDA to rise as much as 5.5 percent this year, the most since 1989.

A bigger crop should stabilize corn prices and ease inflation pressure on grain- and oilseed-based food products, USDA Chief Economist Joe Glauber said today in an interview. Unlike some past floods, such as the 1993 Midwest deluge most often compared with this year's, farmers had a chance to replant crops with assistance from the weather.

``With wet weather or late planting, sometimes the root system isn't fully developed, so that you really need timely rains'' combined with land that's drying out from overflows, he said. ``The plant population looks pretty good.''

Skeptical Analysts

Some analysts said USDA's yield projection for corn is high and the government may be underestimating the residual damage caused by the June floods, especially in Iowa.

``The thing that surprised me was the fact they increased harvested acres as a percentage of planted acres,'' said Tomm Pfitzenmaier, a partner at Summit Commodity Brokerage in Des Moines, Iowa. ``I talk to people who tell me about how bad their drowned-out stalks are everyday.''

On June 22, during the height of flooding, the USDA said 59 percent of the corn crop was in good or excellent condition, down from 73 percent at the same time in 2007. For soybeans, it was 57 percent, compared with 66 percent. The USDA yesterday said 67 percent of corn was in good or excellent condition and 63 percent of soybeans, compared with 56 percent for both at the same time last year.

``Abundant rainfall and near- to below-normal temperatures provided nearly ideal conditions for Midwestern corn and soybeans,'' the USDA said in today's report. The department's estimates were made after surveying about 11,000 farmers in Illinois, Indiana, Iowa, Minnesota, Missouri and Wisconsin during July and August.

To contact the reporters on this story: Alan Bjerga in Washington at abjerga@bloomberg.net;

Last Updated: August 12, 2008 13:06 EDT

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Bloomberg.com: Opinion

Aug. 12 (Bloomberg) -- Never mind.

Or, in the words of Merrill Lynch & Co. Chief Executive Officer John Thain, ``Our clients have been caught in an unprecedented liquidity crisis. We are solving it by giving them the option of selling their positions back to us.''

Thain said these words on Aug. 7, after the firm announced it would offer to buy back $10 billion in auction-rate securities from individual investors beginning in January.

The Merrill offer came the same day Citigroup Inc. reached an agreement with regulators to buy back the auction-rate paper it sold to individuals, small businesses and charities, and the day before UBS AG reached a similar agreement to make its customers whole.

There: Auction-rate securities problem solved.

I love the way Thain put the whole episode in present tense, and how he put Merrill in the role of the knight on the white charger, coming to the rescue of investors. If you didn't know what happened, you might be tempted to believe it.

The only question I have for these securities firms' CEOs is: If you had it all to do over again, would you still have stopped supporting these auctions back in February, leaving thousands of customers with investments that they could see but not get their hands on?

`De Minimis'

Thain makes it sound like Merrill's clients were walking around one fine day and all of a sudden stepped in quicksand. He didn't even have the grace to say, ``Mistakes were made,'' which are weasel-words but at least convey that someone made a boo-boo.

The only problem Merrill's clients had was Merrill. The firm sold them auction-rate securities without really telling them how the auctions worked, or that they would stop working if Merrill stopped providing backup bids.

Investors thought they were buying an investment vehicle that was described to them as just like a money-market fund, except with a little more yield. Some brokers apparently didn't even know that their own firm propped up the market, according to the administrative complaint filed on July 31 against Merrill by Massachusetts Secretary of State William Galvin.

Asked what kind of an impact the buyback would have on its balance sheet, Citigroup spokesmen said, ``de minimis,'' a Latin expression meaning insignificant.

Can you imagine? ``De minimis''?

Blood Oath

Let's think about that. I'm sure the company wanted to downplay the impact of the settlement, and maybe sound a little bit flip and even dismissive about it, but what an unfortunate and insulting choice of words.

Thousands of investors at minimum were mightily inconvenienced because they couldn't get at their money.

Their brokers had nothing to tell them, and the firms themselves, at least to judge from the volume and intensity of e- mail I received on this subject, were eerily uncommunicative.

Because of all this, customers have sworn blood oaths against their brokers -- even ones whom they had worked with for years -- and now say they will never trust their securities firms in particular and big Wall Street firms in general ever again -- and this was ``de minimis''? If this was ``de minimis,'' then why was it so important for the big firms to blow up the auction-rate market six months ago?

I wonder, too, just how ``de minimis'' the hundreds of states and municipalities that have had to spend millions of dollars in higher interest and refinancing costs find this whole sorry episode.

Lost to History

Surely the saddest words that accompanied the Citigroup story were: ``Citigroup neither admitted nor denied allegations of wrongdoing.''

This is common practice in securities-firm settlements. The company in question sidesteps the guilt and embarrassment of owning up to its bad behavior.

Now lost to the narrative of ``Lessons Learned From the Great Auction-Rate Securities Freeze of 2008'' are hundreds of pages of e-mails, reports and memoranda that would have documented Citigroup's role in the disaster. I can't imagine that they would have looked very much different from the UBS and Merrill exhibits, but we'll never know.

With the biggest names in the auction-rate securities market now agreeing to provide investors with ``liquidity at par,'' as they call it, we can expect the others to follow suit. It will be interesting to see the next act of this performance, because, as you know, the show never ends. How will the auction-rate securities be repackaged for sale?

(Joe Mysak is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Joe Mysak in New York at jmysakjr@bloomberg.net

Last Updated: August 12, 2008 00:01 EDT

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UBS rips up bank structure as rich clients flee - Forbes.com

Switzerland - (Updates with closing price, Olivant comment)

By John O'Donnell and Sam Cage

ZURICH, Aug 12 (Reuters) - UBS (nyse: UBS - news - people ) will separate its troubled investment bank from its prized wealth management arm, paving the way to sell the business that made it Europe's biggest casualty of the credit crunch.

The world's No.1 banker to the rich gave in to shareholder pressure to restructure on Tuesday, admitting there were problems keeping the two businesses integrated.

"It might be that we keep or divest or enter into joint ventures or collaboration," Chairman Peter Kurer told journalists, adding that there were no plans yet to sell parts of the business.

As peers such as Credit Suisse drew a line under the crisis, there were further reminders of the damage the investment bank has wreaked at UBS as investment writedowns climbed a further $5 billion to top $42 billion.

It haemorrhaged 44 billion Swiss francs ($41 billion) in the second quarter as investors moved their money to rivals including smaller Swiss banks.

Net new money inflows had been 34 billion francs a year earlier but many well-heeled clients have been scared off by the steady stream of bad news out of the group's Zurich headquarters. UBS has invested 2,000 billion francs for the world's wealthy.

Kurer's change of direction breaks a taboo at UBS, which has long stood by its strategy of running asset management, banking for the rich and investment banking together. These will now be run as autonomous businesses.

The move comes after the bank came under increasing pressure from investor Olivant -- headed by former UBS Chief Executive Luqman Arnold -- which has been pressing for a break-up.

"We believe UBS investment bank will be not fully owned and even potentially disposed of by UBS over the next two years," said JP Morgan analyst Kian Abouhossein.

Investors welcomed the decision, sending UBS's shares up initially although they later slipped and closed 2.4 percent lower at 22.62 Swiss francs as European peers also fell.

Olivant, which holds 2.78 percent of the ordinary share capital of UBS, welcomed the new strategic direction but cautioned that problems remained, not least to the bank's once rock-solid reputation.

HARD KNOCKS

The Swiss bank also appointed a new finance chief, former investment banking deal broker John Cryan, who last year masterminded the break-up of ABN AMRO which sold itself to a consortium led by the Royal Bank of Scotland (nyse: RBS - news - people ).

"We have learnt our lessons," chairman Kurer told journalists and analysts later, saying the bank would remain independent as it pares back 5,500 staff.

But Kurer and Chief Executive Marcel Rohner still face widespread investor unrest. UBS's share price has tumbled by almost two thirds to record lows since the start of the year -- twice that of European peers.

"We are still not happy with the results," said Helmut Hipper, a fund manager at UBS shareholder Union Investment.

Hipper said that there was evidence that not only Swiss customers were ditching the bank. "A big part of the money outflows were international," he said. "The reputational problems are hitting home internationally." The result in the second quarter -- a bigger-than-expected loss of 358 million francs -- was impacted by UBS's move to buy back bonds it was accused of misselling.

UBS and U.S. rivals Citigroup (nyse: C - news - people ) and Merrill Lynch (nyse: MER - news - people ) remain the three hardest hit in the financial markets turmoil.

Unlike its American rivals, however, UBS is being singled out for tough new rules from the Swiss banking watchdog that will force it to keep back considerably more capital, putting a brake on its investment bank in London and Wall Street.

UBS's admission that the one-bank model is broken comes just a week after rivals HSBC (nyse: HBC - news - people ) and Barclays (nyse: BCS - news - people ) defended the strategy.

** To read more on UBS please double click on (Additional reporting by Albert Schmieder and Steve Slater in London; Editing by Louise Ireland/Elaine Hardcastle)

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Barack Obama shifts on tapping national oil reserves - Los Angeles Times

LANSING, MICH. -- Democrat Barack Obama called today for tapping the nation's strategic oil reserves to help drive down gasoline prices, a shift from his previous position on the issue.

The reversal is the second refinement in Obama's energy policy. Last week, he said that he would reluctantly consider accepting some offshore oil drilling. Obama had previously said he opposed such drilling, which is strongly backed by rival John McCain, who has urged that states be allowed to decide whether to drill.

 

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McCain has been able to score political points on energy issues in recent weeks, particularly in swing states such as Michigan.

Obama is scheduled to campaign this week on energy and economic issues in the battleground Midwest. McCain campaigned in Pennsylvania, where he called on Congress to return from vacation to deal with energy issues. Later, McCain travels to South Dakota.

As part of the Obama campaign's focus on energy, it released a new advertisement criticizing McCain's energy policies.

In his speech in Lansing, Obama, who celebrates his 47th birthday today, tipped his hat to McCain, quoting the Arizona Republican: "Our dangerous dependence on foreign oil has been 30 years in the making and was caused by the failure of politicians in Washington to think long-term about the future of the country," Obama said.

"What Sen. McCain neglected to mention was that during those 30 years, he was in Washington for 26 of them," Obama said.

Obama's plan would release light oil from the emergency oil stockpile and replace it later with heavier crude. Light crude oil is easier to refine into gasoline than heavier oil. In 2000, President Clinton used a similar tactic to make oil available at a time of rising oil prices.

The Obama plan is similar to efforts by congressional Democrats and is opposed by Republicans and President Bush.

House Speaker Nancy Pelosi (D-Ca.) for weeks has called on Bush to withdraw oil from the government reserve, and Sen. Jeff Bingaman (D-N.M.), chairman of the Senate Energy and Natural Resources Committee, has tried to get agreement on legislation that would require the release of 70 million barrels of oil from the government stockpile.

The McCain campaign lost no time in criticizing Obama.

"Tapping the strategic oil reserve is not a substitute for a real plan to increase supply through additional drilling and nuclear power," said campaign spokesman Tucker Bounds in a statement e-mailed to reporters.

"The strategic oil reserve exists for America's national security strategy -- not Barack Obama's election strategy. The last release of oil from the strategic reserve came in response to Hurricane Katrina, but the only crisis that has developed since Barack Obama last rejected this idea two months ago is a slide in his poll numbers," Bounds said.

Recent polls show that McCain has gained some traction on the energy issue. For example, the latest Quinnipiac University poll for the Wall Street Journal and washingtonpost.com shows that Obama tops McCain 46% to 42% compared with a previous lead of 48% to 42%.

Energy issues are the leading concern -- more important in most polls than the war in Iraq -- and voters say they support offshore oil drilling. Other polls show similar results in the West and Southwest, also key electoral battlegrounds.

In its new advertisement, the Obama campaign attacks McCain's relationship with the oil industry.

"After one president in the pocket of big oil, we can't afford another," says the ad, referring to President Bush's previous work in the oil industry.

The new Obama ad also again calls for a windfall profits tax on oil companies and a $1,000 energy rebate for families.

"Barack Obama's latest attack ads shows his celebrity is matched only by his hypocrisy," said McCain spokesman Bounds. "After all it was Sen. Obama, not John McCain, who voted for the Bush-Cheney energy bill that was a sweetheart deal for oil companies. Also not mentioned is the $400,000 from big oil contributors that Barack Obama has already pocketed in this election."

In his speech, Obama noted that there was a bipartisan compromise on energy in the works.

Morgan Freeman injured in car wreck | U.S. | Reuters

TUPELO, Mississippi (Reuters) - Oscar-winning U.S. actor Morgan Freeman was hospitalized in serious condition on Monday after the car he was driving careened off a rural highway and rolled several times, authorities said.

Freeman, 71, was airlifted late on Sunday night to a Memphis, Tennessee, hospital, about 100 miles from the accident scene, which is near a home he keeps in Charleston, Mississippi.

"The vehicle went off the edge of the road and flipped several times," Mississippi Highway Patrol Sgt. Ben Williams said. No other car was involved in the accident.

From the direction Freeman was traveling, he appeared to be headed toward his home, Williams said.

Williams said it was "possible" that Freeman, who co-stars in the current blockbuster Batman movie the "Dark Knight," had fallen asleep at the wheel, but he added that authorities had ruled out alcohol as a factor in the wreck.

Freeman was conscious and talking to arriving officers afterward, Williams said, adding that no citation had been issued in the accident.

A spokeswoman at Regional Medical Center in Memphis said Freeman was in serious condition but gave no further details.

Both Freeman and a female passenger, identified as Demaris Meyer, were wearing seat belts, but the air bags did not deploy in the 1997 Nissan Maxima registered to Meyer, Williams said. He said he did not know the extent of her injuries.

Freeman was born in Memphis but spent much of his childhood in Mississippi and has opened a music club in the state.

Las Vegas Now | Poor Economy Delays Las Vegas Echelon Project

The slumping economy has taken a toll on a massive construction project that was supposed to help boost the Las Vegas economy. Work on the Echelon Hotel- Casino stopped Friday and won't start back up for at least a year.

The delay for Echelon is the first huge blow to the future of Las Vegas because of the slow economy. 800 construction workers were told to stop working because Echelon has been placed on hold.

"Clearly, as we look at it, we think in the next nine to 12 months -- we think in the next three to four quarters -- that we will be at a place where we can restart the project," said Boyd Gaming President and CEO Keith Smith.

SLIDESHOW: Poor Economy Delays Echelon Project

Smith made the public announcement at the release of their quarterly earnings report. He says this has nothing to do with Boyd Gaming as a company, but how the slow economy affected the minority partners on the project.

Morgan's Hotel Group committed to building two boutique hotels, but no one would agree to loan them the money for their part.

General Growth Properties was building the mall and could not sign high end stores to long term leases. Smith says that forced Boyd to delay Echelon, "It's interesting. When you turn the clock back a year, you could have never guessed that we would be in this position a year later."

Smith adds waiting about a year will hopefully loosen investment money. Without that money, the third wave of new jobs in Las Vegas will have to wait.

Echelon Delay Could Have Major Economic Impact

Encore opens in December, planning to hire 5,300 people. In 2009, Project CityCenter opens employing 12,000 people. But the 10,000 new jobs at Echelon set for 2010 will have to wait.

"We began to notify the workers and contractors this morning -- having conversations with them. We will be winding down with them as quickly as possible," said Smith.

Some work will continue for the next year, but only to make sure that the equipment stays secure on the construction site.

Smith believes that by 2011, when it's now scheduled to open, the economy should be in a full up-swing.

Boyd Gaming is in the process of renegotiating with Morgan's and General Growth Properties. Because they could not make financing, their contracts with Boyd Gaming are up in September.

General Growth Properties released earnings Thursday. In their call with investors they alluded to this problem. The company owns four other properties in Las Vegas.

The President and CEO says the Grand Canal Shoppes at the Venetian is doing very well. Stores are making an average of $1,200 a square foot. The Fashion Show Mall on the Strip is making about $1,100 a square foot. But the newly opened Shoppes at the Palazzo are struggling. Many of the stores have still not opened.

General Growth's newest property, the Shoppes at Summerlin Centre, has also been put on hold. By waiting a year to open, General Growth hopes to have 90-percent of the shoppes rented.

Profit at Sun Microsystems Falls 73 Percent - NYTimes.com

SAN FRANCISCO (AP) — Profit at Sun Microsystems, the computer server maker, declined 73 percent in the most recent quarter as slumping sales to big American companies and reorganization charges weighed on the server and software maker.

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Willie Walsh, the chief executive of British Airways.

The company, based in Santa Clara, Calif., also revealed plans Friday to expand its stock buyback program by $1 billion, a sign that Sun believes its shares, which have fallen by 50 percent over the last nine months, are undervalued and poised to rebound.

Wall Street did not share that optimism.

Sun’s shares sank 12.3 percent, to $9.32, on the company’s worse-than-expected guidance, which indicated that the pressures that hurt Sun in the April-June period, its fourth quarter, are affecting the current quarter.

Sun said before the market opened that it expected a “slight” sales decline in its first quarter, which ends in September, and indicated it most likely would not turn a profit. Analysts surveyed by Thomson Financial were expecting flat sales and a profit of 11 cents a share in this quarter.

The Goldman Sachs analysts David Bailey and Min Park said in a note to clients that Sun’s results supply “another piece of evidence that the problems the company faces have no short-term fixes, and we would continue to avoid the shares.”

Sun blamed weakness in the American economy, which has caused some of its biggest customers to cut spending, and the sale of fewer higher-end servers, which carry better profit margins. Sun faces intense competition in that market from I.B.M. and Hewlett-Packard.

Sun earned $88 million, or 11 cents a share, in the quarter, compared with $329 million, or 36 cents a share, in the period a year ago.

Excluding one-time charges, Sun earned 35 cents a share.

Sales were $3.78 billion, down from $3.84 billion last year.

Reuters Business Summary - washingtonpost.com

Small Florida bank is 8th U.S. failure this year

WASHINGTON (Reuters) - Bank regulators closed a small Florida-based bank on Friday, the eighth U.S. bank to fail this year under pressure from a weak economy and a credit crisis precipitated by falling home prices. The Federal Deposit Insurance Corp said First Priority Bank had $259 million in assets and $227 million in deposits and its failure will cost the federal fund that insures deposits an estimated $72 million.

S&P emails slammed mortgage debt products: report

CHICAGO (Reuters) - Analysts at Standard & Poor's Rating Services warned against mortgage-related debt products in internal e-mails that, in one case, called the complex financial deals "ridiculous," the Wall Street Journal reported in its weekend edition. The Journal cited a draft revision of a U.S. Securities and Exchange Commission report on bond-rating firms that was first released on July 8.

Yahoo board wins solid shareholder backing in vote

SAN JOSE, California (Reuters) - Yahoo Inc's (YHOO.O) board of directors won strong backing from shareholders at its annual meeting on Friday, with Jerry Yang, the company's embattled CEO, receiving 85 percent of the vote in his favor. Investors holding nearly 76 percent of Yahoo's 1.38 billion shares gave solid votes in favor of all nine current directors, in what represents an endorsement of their tough stance with Microsoft Corp (MSFT.O) in talks on a merger or partial sale.

Carrefour denies report it looking for new chief

PARIS (Reuters) - French supermarket chain Carrefour (CARR.PA) denied on Saturday that it had hired headhunters to seek a replacement for Jose Luis Duran, its chief executive. The Financial Times quoted an unnamed prominent businessman as saying he had been approached by a headhunter before a July 28 shareholder meeting called to approve a simplification in the management structure.

U.S. Vehicle Sales Fall 13.2% Amid High Gas Prices and Tight Credit - NYTimes.com

Vehicle sales in the United States fell last month to their lowest level in 16 years, as consumers continued to shun large trucks because of high gas prices, and tight credit kept less creditworthy customers off lots.

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A Ford plant in Oakville, Ontario. The automaker reported that sales in the United States fell 15 percent in July from a year ago.

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Sales were down 13.2 percent, at a time when the companies had expected to begin seeing an improvement.

Instead, the five largest automakers each reported sales declines on Friday. Sales fell 26.1 percent at General Motors, the largest car company, while Chrysler, which used to be the third-largest, reported a 28.8 percent decline and came within a few thousand sales of falling to sixth place. The Ford Motor Company posted a 14.7 percent decline.

Together, the three Detroit automakers accounted for just 42.7 percent of the vehicle market last month, selling about 150,000 fewer vehicles than they had a year earlier.

The declines in the United States market affected foreign automakers too.

Toyota Motor reported an 11.9 percent decline, while Honda, which builds fewer trucks than its rivals and was the only large automaker to report a sales increase for the first half of the year, said its July sales decreased 1.6 percent. Nissan’s sales rose 8.5 percent on strong demand for its small cars.

As recently as this spring, executives in Detroit forecast that auto sales would rebound in the second half of 2008, as consumers spent their federal rebate checks and overcame difficulties in the housing market. But the July sales figures suggest that will not be the case.

In fact, the industry’s annualized sales rate of 12.55 million was its lowest since April 1992, showing that the market is continuing to deteriorate.

Soaring borrowing costs for the automakers’ financing arms and other lenders have led to higher automotive loan rates and tighter credit standards, which have cut sharply into sales. G.M. said it is losing 10,000 sales a month that it used to get from customers with below-average credit ratings.

“In the next several months, or even the next year I would say, the unfolding credit situation that customers are facing in dealerships will take center stage,” said James D. Farley, Ford’s marketing chief. “A lot more creativity has to take place in the finance and insurance office to sell a car now.”

Meanwhile, leases are becoming significantly harder to obtain, with Chrysler no longer offering leases through its financing arm.

G.M. and Ford said on Friday that they will cut back on leasing but remain committed to that business.

Falling sales of sport utility vehicles and pickup trucks have caused resale values of those vehicles to plummet, and that has turned many leases into huge money losers for the automakers. Unprofitable leases led to write-downs of $2.1 billion for Ford and $716 million for G.M.’s financing arm, the General Motors Acceptance Corporation, which it partly owns. GMAC this week halted subsidies for leases in Canada.

“All the risk, all the liability and all the expense is being put onto the consumer with this move away from leasing,” said Rebecca Lindland, an analyst with the research firm Global Insight. “There may be unintended consequences to this move, and they may be unpleasantly surprised that consumers walk away and go someplace else.”

About 20 percent of customers lease vehicles, according to J. D. Power & Associates’ Power Information Network. Mark LaNeve, G.M.’s vice president for North American sales and marketing, said G.M. hoped to cut leasing so that it accounted for between 10 and 15 percent of its business.

“It’s a move that we have to make to reduce our risk in the marketplace,” said Mr. LaNeve. “If the industry can see its way through this, it’s going to give us much higher quality of sale and a much higher profit per vehicle.”

Chrysler said Friday that it would offer 72-month financing deals so that customers could buy a car with monthly payments similar to leases to ease the transition away from leasing.

Ford estimated that total light vehicle sales this year would be 13.7 million to 14.2 million, a considerable drop from the first half’s annualized rate of 15 million. In 2007, automakers sold more than 16.1 million vehicles in the United States.

Ford said that its car sales were up 7.8 percent last month, but that sales of S.U.V.’s, a segment that used to generate huge profits for all three Detroit automakers, plunged 54.4 percent. G.M. sold 18.9 percent fewer cars and 34.7 percent fewer light trucks.

At Toyota, car sales were roughly flat because of shortages of some models, while sales of pickup trucks and S.U.V.’s dropped 27 percent.

Summer is typically a strong season for the automakers, as they unload their remaining inventory from the old model year and begin selling new vehicles. But $4-a-gallon gas and a sluggish economy have kept many consumers who might normally be in the market for a new car away from dealerships.