General Motors and Chrysler have received $13.4bn in federal loans to stay afloat and hope to receive more after they submit viability plans to the government by February 17, while Ford has said it does not plan to use government aid.

Global slump

But US manufacturers are not the only ones to suffer losses, with Japan's Toyota reporting a 34 per cent sales decline, Nissan almost 30 per cent and Honda a 28 per cent fall in sales.

And European vehicle manufacturers also reported slumps in sales for January, with Germany's Daimler AG and Porsche down 36 per cent and Volkswagen AG down 12 per cent.

Both domestic and foreign car makers have been struggling as the US economy continues to slide, with rising unemployment, weakening consumer confidence and tight credit conditions.

"The truth is that the entire auto industry finds itself in the eye of this economic storm," Bob Carter, Toyota's US manager, told reporters on Tuesday.

Vehicle sales in the US represent one of the key indicators of consumer demand and account for as much as a fifth of all retail sales.

US vehicle sales had already fallen 18 per cent in 2008 to about 13.2 million vehicles.