March Sales of Domestic Cars Sag as Imports Gain

Times Staff Writer

Sales of imported cars boomed in March while those of domestically built models slumped badly, the auto makers reported Thursday. Analysts predicted that the Detroit companies may soon have to institute a new round of sales incentives to lure back customers.

Overall, new car sales were down 7.7% in March, compared to the year before, as a 15.6% drop in sales of domestic models more than offset a hefty 22.5% rise by imports. The foreign makes’ showing was helped by hot sales of expensive European models and by the introduction of South Korea’s Hyundai subcompact, which grabbed 1.2% of all U.S. car sales in its first full month in American showrooms.

Chrysler Posts Biggest Drop

Importers sold an estimated 246,400 cars in March, representing 27.5% of the market, despite a recent series of sharp price increases by Japanese manufacturers as a result of the yen’s appreciation against the dollar.


Among Detroit’s Big Three auto makers, Chrysler posted the largest decline, down 21.4% from March, 1985. Ford said its sales were off 18%, while GM’s sales slid 14.3%.

In the last 10 days of the month, the domestics did even worse, with sales of 236,735 cars, off 21.5% from the year before. The daily selling rate of 26,304 was the worst for the March 21-31 period since 1982, when the industry was emerging from its worst slump in 50 years.

Many industry analysts now believe that the major U.S. auto makers will soon have to either offer major new sales incentives to reduce their inventories or cut back on their ambitious production schedules. Earlier this week, GM announced plans to lay off more than 4,700 workers, including nearly 2,200 at its Van Nuys plant, in order to reduce production of some slow-selling models.

But in general, the domestic industry has shown few signs of scaling back its ambitious second-quarter production schedules. In addition, GM announced last week that it will drop, at least for now, its cut-rate financing offers and raise prices by 2.9% later this month--a move some analysts called “disastrous.”


“I don’t think the price increase is going to stick. GM (must) offer incentives to offset the increase,” said Michael Luckey, an auto analyst with the New York investment firm of Shearson Lehman Bros. “To drop incentives and raise prices would be disastrous. . . . Demand would weaken further from an already weak level.”

Meanwhile, price hikes on Japanese models so far appear to have had little effect on sales, in part because the cars remain in short supply. The Japanese government has continued its “voluntary” program of limiting shipments to 2.3 million cars annually.

Faced with the rise of the yen against the dollar, Japan’s Big Four manufacturers--Toyota, Nissan, Honda and Mazda--have raised prices by an average of 10.7% over the last six months. But, of the major importers, only Nissan posted a sales decline in March, down 14.4%. By contrast, Toyota sales rose 18.5%, while Honda and Mazda posted increases of 3.4% and 30.6%, respectively.

‘Import Market in Good Shape’


Luckey said the recent strong sales showing by the Japanese “indicates that the import market is in good shape” in spite of the price increases. He noted, however, that many dealers selling Japanese cars are choosing to absorb the price hikes rather than risk turning off customers. “The import market is very competitive, and dealers still have allocations,” he said.

Hyundai sold 10,432 of its subcompact Excels in March. The Korean company said the results were in line with its hopes to sell 100,000 cars in the United States in its first year here.

On a seasonally adjusted basis in March, domestic makes sold at an annual rate of 7 million and imports at a 2.5-million rate.

Auto Sales


March % 1986 1985 change GM 355,880 415,218 -14.3 Ford 167,490 204,315 -18.0 Chrysler 90,945 115,729 -21.4 AMC 6,300 11,393 -44.7 VW U.S. 6,198 7,233 -14.3 Honda U.S. 15,175 15,039 +0.9 Nissan U.S. 7,363 -- -- DOMESTIC 649,351 768,927 -15.6 Toyota 39,008 32,906 +18.5 Nissan 33,357 38,985 -14.4 Honda 31,248 30,228 +3.4 Mazda 23,561 18,034 +30.6 Subaru 17,499 11,876 +47.3 Volvo 10,029 9,582 +4.7 VW Imports 13,008 10,757 +20.9 Hyundai 10,432 -- -- Others* 68,248 48,793 +39.9 IMPORTS* 246,400 201,161 +22.5 TOTAL U.S. 895,751 970,088 -7.7

* Estimate