U.S. New-Car Sales Off 8.6% in Early May : Incentive Plans Help to Stem Drop, Analysts Say

Times Staff Writer

Even though the four biggest car makers continued to offer sales incentives during the period, the number of new cars sold in the first 10 days of May fell 8.6% from a year ago, the domestic companies said Tuesday.

The seven auto makers with domestic operations said they sold 217,832 cars in the May 1-10 period, compared to 238,240 in the 1984 period.

General Motors, Ford, Chrysler and American Motors had discount-financing programs in effect for the period on certain slow-selling models.

The four companies had offered similar incentive programs that expired in April, but, due to competitive pressures, all of the firms started offering new incentives this month.


“Sales incentives (have) proved to be very potent and successful in reducing inventories,” said Scott Merlis, an auto analyst with Shearson Lehman Bros. “Sales would have been down much more without them.”

8.1-Million Annual Rate

However, Merlis added, sales incentives tend to be most effective when first announced.

“As time goes on, sales incentives become less effective,” he said.


On a seasonally adjusted basis, early May sales equaled an 8.1-million annual rate, down slightly from the 8.5-million annual rate recorded in April.

The annual rate for early May in 1984 was 8.8 million.

The seasonally adjusted annual rate is a calculation of a full year’s sales based on the current pace.

GM reported a decline in its market share compared to last year.

The auto maker claimed 59.3% of the domestic market (excluding imports) in the first 10 days of May this year, compared to a 62.3% share in the same period last year.

“GM never got back the market share it lost” when its U.S. and Canadian workers staged separate strikes against the firm last fall, said Ted Sullivan, an industry analyst with Data Resources.

“And it is tough to recapture share with a lot of incentives in place” at the other auto companies, he added.

Auto Sales


May 1-10 May 1-10 % 10-Day 1985 1984 change GM 129,212 148,431 -12.9 Ford 52,919 54,537 -3.0 Chrysler 27,359 26,359 +3.8 AMC* 2,950 4,050 -27.2 VW U.S. 1,690 1,737 -2.7 Honda U.S. 3,202 3,126 -2.4 Nissan* U.S. 500 n.a. n.a. TOTAL 217,832 238,240 -8.6