Incentives Send Car Sales Up 1.7%
Propelled by discount financing incentives, domestic new car sales rose 1.7% in mid-September, the U.S. auto makers reported Wednesday.
The seven domestic manufacturers sold 294,636 cars between Sept. 11 and Sept. 20, setting a record sales pace for the period. The previous high for the period was posted last year when manufacturers, also using incentives as bait, sold 289,582 cars.
But despite the healthy results, sales did not come close to matching the 368,674 cars sold during the first 10 days of the month. Early September marked the first full period in which the U.S. auto makers offered cut-rate financing ranging from 5.9% to 0% on 1986 models.
Meanwhile, industry observers predicted that the domestic manufacturers will introduce another round of incentives, perhaps as soon as two weeks after the current programs expire.
“The domestic auto makers have a strong fourth-quarter production schedule and that’s usually an indication that we will see incentives to prevent bloated inventories,” said Ted Sullivan, an auto industry analyst with Chase Econometrics.
Sullivan said he expects sales to continue to slow as 1986 model-year inventories shrink. He also predicted a dramatic drop in sales if the incentives are allowed to expire in early October as scheduled.
General Motors’ sales were relatively flat, up a scant 0.2% over the year-ago period. GM’s market share fell to 53.4% from the 54.3% posted in the same period last year.
GM Chairman Roger Smith said the cut-rate financing program will steal sales from the fourth quarter and adversely affect third-quarter earnings.
“We have definitely borrowed sales from the fourth quarter, but that doesn’t mean a slump,” Smith said, speaking Tuesday at the dedication of the $1.7-million UAW/GM Human Resource Center in Auburn Hills, a Detroit suburb. “I think we’ll still have a good quarter.”
Smith said GM has no plans to offer incentives on its 1987 models. However, depending on the market, he said the company might reinstate incentives later in the model year.
Ford, which entered the latest incentive game with the leanest inventory, said its sales fell 7.5% in mid-September. The No. 2 auto maker said it sold 77,224 new cars in the latest period, compared with 83,451 in 1985.
A Ford spokesman noted that sales were extremely strong in the year-ago period--accentuating the current decline. Ford held 28.8% of the domestic market last year and 26.2% in the same period this year.
Meanwhile, Chrysler sales continued to boom, up 29.3% between Sept. 11 and Sept. 20. The No. 3 auto maker said last week that it would offer low financing rates on some of its 1987 models as well as 1986 models. Chrysler increased its share of the market to 16.2% this year, up from 12.7% in last year’s mid-September period.
Among the smaller manufacturers, American Honda said its sales were up 60% while American Motors and Volkswagen U.S. reported declines of 28.8% and 18.7%, respectively. Nissan U.S. said its sales continued to decline, down 16.1% for the period.
On a seasonally adjusted basis, domestic new cars sold at an annual rate of 11 million, up slightly from the 10.9-million annual rate recorded in the same period last year.
The annual rate is a reflection of the number of cars that would be sold if a certain period’s sales pace were to continue for a full year.
Auto Sales
Sept. 11-20 Sept. 11-20 % 10-Day 1986 1985 change GM 157,534 157,219 +0.2 Ford 77,224 83,451 -7.5 Chrysler 47,666 36,874 +29.3 AMC* 2,580 3,625 -28.8 VW U.S. 2,087 2,567 -18.7 Honda U.S. 5,550 3,469 +60.0 Nissan U.S. 1,995 2,377 -16.1 TOTAL 294,636 289,582 +1.7
*Estimate
Los Angeles Times
