SAN FRANCISCO (MarketWatch) - The auto industry's historic meltdown showed no signs of relenting in January, with Ford Motor Co., General Motors Corp. and Chrysler on Tuesday posting U.S. sales declines of more than 40% -- below even the lowest of Wall Street targets.

Toyota Motor Corp. TM, -1.29% , on the brink of posting its first-ever operating loss, fared only slightly better as the entire global auto industry continues to suffer.

With the majority of automakers having reported, the annualized sales rate for the month is poised to break below 10 million cars and trucks. Analysts had predicted an annual sales rate of 10.2 million.

"It's actually a little worse than we were expecting and we were one of the lowest in terms of what we were forecasting for January, but we're not surprised at all," IHS Global Insight analyst John Wolkonowicz said. "This is going to be a very tough year for the auto industry." Listen to full interview.

The lowly figures also touch levels not seen since the early 1980s as consumers sit on their cash in the face of soaring unemployment and plunging home values.

In fact, GM sales analyst Mike DiGiovanni said in a conference call the industry numbers are on track to mark the worst January since 1963 and, if the rate hits 9.8 million vehicles, would mark the first time ever that China has surpassed the U.S. in terms of monthly sales.

Ford kicks off the carnage

Ford Motor Co. F, -1.34% reported a 40.2% drop in the world's biggest car market last month, pinning the blame on a pullback from its fleet customers and saying its retail business has stabilized since the swift retreat last fall.

Ford sales, including the Volvo brand, which is currently being shopped, pulled back to 93,506 from 156,391 a year earlier.

“ "Even with a boost from the anticipated federal stimulus plan, we see consumers taking a cautious approach to large-ticket discretionary purchases." ” — Efraim Levy, S&P Equities analyst

Ford, Lincoln and Mercury car sales dropped 35.1% to 28,707. Trucks fell 40.5% to 61,889, with the flagship F-Series pickup down 38.6%.

Fleet sales, primarily to rental-car companies, plunged 65%, the company said. The retail business slipped 27%, though Ford pointed out that it gained retail market share for the fourth consecutive month, a streak it last assembled in 1995.

Ford is looking for government stimulus to provide some support or maybe even a catalyst heading into the second half of what looks to be a very difficult year.

Standard & Poor's Equity Research Services analyst Efraim Levy reiterated his hold rating on shares of Ford following the results, warning that if retail declines were to continue at this rate, the company, like its domestic rivals, will likely have to tap the government for loans.

"Even with a boost from the anticipated federal stimulus plan, we see consumers taking a cautious approach to large-ticket discretionary purchases," Levy said.

Ford shares shrugged off early declines to close up more than 4% higher at $1.96.

Ford last week posted a fourth-quarter loss of $5.9 billion, bringing its total loss for the year to $14.6 billion, the company's worst ever. See full story.

GM slashes production; Chrysler leads declines

GM GM, -2.37% said its sales fell 48.9% to 128,198 light vehicles from 250,926 in January 2008. The car side plunged 57.9% to 43,943 while truck sales lost 42.5% to 84,255.

The automaker also forecasted its North American production to total 380,000 vehicles in the first quarter - 118,000 cars and 262,000 trucks, down 57% from the same quarter last year.

DiGiovanni blamed not only lower fleet sales, but also the customer's inability to obtain adequate financing.

"People are coming in, wanting to buy vehicles and they're being turned down, just that simple," he said. "We have to break and thaw the credit markets for consumers who want to buy automobiles. We're seeing some minor thawing occurring but not nearly enough."

The dismal numbers come as GM, along with Chrysler, prepares to update the U.S. government as to whether the recent federal bailout is yielding the necessary results.

GM shares failed to hold positive territory, closing down 1.4% at $2.85.

Separately, Chrysler was hit the hardest of all, with its sales down 55% to 62,157 cars and trucks from a year ago on the back of an 81% drop in fleet sales.

As was the case with GM, Steve Landry, head of Chrysler sales and marketing, pointed to the lack of consumer credit, not so much waning demand for Chrysler vehicles.

"We saw a negative trend in December, we're seeing it again this month and we could see it for the year," he said. "Many more consumers wanted to buy a vehicle than could qualify for financing under the current credit conditions."

Same story for the Japanese

Toyota said its U.S. sales declined 31.7% to 117,287 vehicles from 171,849 a year ago. Passenger-car sales fell 28.9% to 67,263, while light-truck sales dropped 37.6% to 42,548.

Toyota is scheduled to hold a conference call Friday to discuss what is expected to be a massive loss.

Honda Motor Co. HMC, -1.18% reported a drop of 27.9% to 71,031 vehicles from 98,511 a year ago. Total U.S. car sales slipped to 40,532 from 55,345 a year ago, and truck sales dropped to 30,499 from 43,166 last year.

Nissan Motors NSANY, +2.27% said sales fell 29.7% to 53,884 units from 76,605 a year ago. Nissan brand sales fell to 46,769 vehicles from 67,961, and sales of the luxury Infiniti line dropped to 7,115 units from 8,644 a year ago.

Shares of Toyota, Honda and Nissan all rose at least 2.5% for the session.

On a positive sales note, Korean automaker Hyundai Motor Co. bucked the prevailing industry trend by reporting a 14.3% rise to 24,512 units from 21,452 units in January 2008.

Hyundai sold 1,056 of its luxury model Genesis sedan.

"We got off to a quick start in January thanks to the rollout of our all new Hyundai Assurance Program, which has struck a chord with the American consumer during these uncertain times," Hyundai's head of U.S. sales Dave Zuchowski said.

The "Assurance Program" provides insurance against new car buyers losing their jobs or suffering some other life altering events.