Mid-February U.S. Auto Sales Rise to 13-Year High
Domestic car sales surged to their highest levels in 13 years in mid-February as consumers rushed to take advantage of discount financing and other sales incentives before the programs ended last weekend, U.S. auto makers reported Tuesday.
The seven domestic auto companies said they sold a total of 253,906 passenger cars in the Feb. 11-20 selling period, up 11% from last year’s volume of 228,761.
The 10-day period’s daily selling rate of 28,212 units was the highest mid-February pace since 1973, when the industry sold a record 34,099 cars each day. For the year so far, the domestic firms have sold 1.06 million U.S.-built cars, up 3.9% from 1985’s strong 1.02 million units for the same period.
Most analysts had expected the strong showing in mid-February because domestic sales typically show a brief upswing just before major sales incentive programs expire.
But now, it looks like the U.S. auto makers will be forced to offer some incentives throughout 1986 in order to avoid a sharp slowdown in the face of fierce import competition.
That became clear on Monday, when industry leader General Motors sparked a new round of incentives by offering 9.9% financing on nearly 80% of its car lines in place of an earlier 7.7% program that expired Saturday. Both Chrysler and American Motors have also extended some limited promotional campaigns in recent days, while Ford has so far not announced whether it will resume discount financing to remain competitive with GM.
But analysts wondered whether GM’s new program, featuring less attractive rates, would be enough to avoid a steep decline from the torrid mid-February pace.
“I have my doubts on the 9.9% program,” said Michael Luckey, automotive analyst with Shearson Lehman Bros. “I guess they are banking on the fact that they are offering it on such a wide range of car lines that it will help them keep their production schedules on target through the second quarter.”
On a seasonally adjusted basis, sales in the middle of the month equaled a 9.4 million annual rate, compared to an 8.6-million rate during the same period last year. The annual rate is a calculation of how many cars the domestic firms would sell if the mid-February rate lasted for 12 months.
GM seems to have benefited the most from the last round of incentive programs. After months of watching its market share erode in favor of Ford, Chrysler and the imports, GM in recent weeks has experienced a strong recovery, and it reported an 18.5% gain in the last 10 days. GM said it sold 148,068 U.S-built cars during the period, compared to 124,924 last year.
Ford’s sales also rose--to 64,274, up 5.7% from last year’s 60,813, but Chrysler apparently lost volume to GM, reporting that its sales slumped to 30,683, down 13.9% from 35,619 in 1985.
AMC continued its long slide with a 28.6% drop during the period. It now has barely enough sales volume left to justify the continued operation of its only U.S. passenger car assembly plant in Kenosha, Wis. So far in 1986, AMC has sold just 10,189 domestic cars, down 33.4% from last year’s weak level; the money-losing company’s annual sales rate is now well under half of the annual capacity of one assembly plant.
AUTO SALES
Feb. 11-20 Feb. 11-20 % 10-Day 1986 1985 change GM 48,068 124,924 +18.5 Ford 64,274 60,813 +5.7 Chrysler 30,683 35,619 -13.9 AMC* 2,000 2,800 -28.6 VW U.S. 1,991 2,124 -6.3 Honda U.S. 3,993 2,481 +60.9 Nissan U.S. 2,897 -- -- TOTAL 253,906 228,761 +11.0
*Estimate
