Financing at Cut Rates Sends U.S. Car Makers’ Sales Up a Record 70%
Propelled by cut-rate financing programs, new-car sales by U.S. manufacturers jumped 70.9% in the last 10 days of August, setting an all-time sales record for the period, auto makers reported Thursday.
Industry officials attributed the record percentage gain to low-interest financing currently offered by Detroit’s auto makers on a number of their 1985 models. Extensive consumer incentive programs, however, traditionally pull some sales from the future, prompting industry analysts to warn that domestic sales could slump after the programs end.
General Motors and Ford are offering consumers 7.7% financing, and Chrysler and American Motors are offering 7.5% financing, compared to a 13.5% conventional bank loan. The programs are scheduled to expire in early October as 1986 models begin appearing in dealer showrooms.
Sales Gains Exceed 70%
The seven domestic auto makers sold 405,080 new cars from Aug. 21 through Aug. 31, compared to 237,078 units sold during the same period last year. GM, Ford and Chrysler reported sales increases exceeding 70%. (AMC, the only manufacturer to post a decrease for the period, said its sales declined 18%.)
Due entirely to the sales surge in the last 10 days of August, which accounted for 54% of the 744,764 units sold, new-car sales rose 23.4% for the entire month.
Referring to late August’s sales results as “an explosion,” James G. Vorhes, GM’s vice president of sales and service, said the company’s incentive program “turned the normally slow model-clean-up period into the most exciting selling season GM dealers have had in many years.”
Auto analysts said sales were further bolstered by the ending of the 23-day strike by Teamsters drivers, which temporarily halted the delivery of cars to dealers. But they cautioned that the late-August sales were greatly distorted.
“Because of the financing programs and the ending of the car haulers’ strike, it could be November before we get a real reading of what car sales are like,” commented David Healy of Drexel Burnham Lambert.
Imports’ Market Share Off
For the month, combined total car sales, domestic and imported, totaled 999,764 units--a 22.7% increase over the 814,881 units sold in August, 1984.
Despite depleted dealer inventories brought on by the car haulers’ strike, importers said sales rose an estimated 20.6% in August. Imports claimed 25.5% of the U.S. market last month, down from 28.8% in July.
“The Teamsters strike and our record month in July left our dealers with an extremely low inventory at the start of August,” said Bob McCurry, Toyota USA senior vice president. “Demand remains strong and sales have picked up over the past 20 days, but our dealers are still hampered by low inventories.”
On a seasonally adjusted basis, domestic new-car sales equaled an annual rate of 9.5 million in August, while import sales equaled an annual rate of 2.9 million.
ACCELERATING AUTOMOBILE SALES
August 1985 1984 % change GM 429,278 347,652 +23.5 Ford 185,523 148,935 +24.6 Chrysler 98,325 70,736 +39.0 AMC 11,465 17,531 -34.6 VW U.S. 6,561 6,398 +2.5 Honda U.S. 9,987 12,217 -18.3 Nissan U.S.* 3,625 -- -- DOMESTIC 744,764 603,469 +23.4 Toyota 63,298 57,556 +10.0 Nissan 51,129 46,834 +9.2 Honda 33,620 28,019 +20.0 Mazda 19,256 15,024 +28.2 Subaru 16,548 11,969 +38.3 Volvo 8,273 7,481 +10.6 VW Imports 13,479 6,901 +95.3 Others 49,397 37,628 +20.6 IMPORTS 255,000 211,412 +20.6 TOTAL U.S. 999,764 814,881 +22.7
*Estimate
