But Purchases of Domestic Models Dip 3.9% : Record Year for Imports Helps U.S. Car Sales Hit 13-Year High

Paced by record sales for imports, U.S. auto sales hit their highest level in 13 years during the 1986 model year, the industry reported Friday.

Domestic and foreign manufacturers posted total sales of 11,195,028 passenger cars during the model year, which ended Sept. 30, up 1.1% from 1985.

The slight increase came on the strength of a 16.6% jump in import sales, and in spite of a 3.9% drop in domestic sales.

With import sales of 3,135,940, foreign producers broke the 3-million-unit barrier for the first time despite the voluntary restraints that continue to limit Japanese sales here.

Powered by that performance, the importers’ share of the car market reached a record 28% during the model year, up dramatically from the 24.2% level posted in 1985. The 1986 figure broke the earlier record of 27.8% reached in the midst of the recession in the 1982 model year.

Meanwhile, domestic sales fell back to 8,059,080 from 8,383,263 in the 1985 model year. That decrease came despite the industry’s repeated use of rebate and discount financing programs throughout the year.

What was worse for Detroit during the year was the fact that the U.S. operations of the Japanese auto makers turned in the biggest increases of any of the domestic auto makers. Honda, for example, has established itself as the fourth-largest domestic auto maker; its sales of U.S.-built cars rose to 183,629 units in the 1986 model year, up 22.7%, while Nissan’s domestic sales jumped 134%.

By contrast, Detroit’s Big Three turned in relatively flat performances for the year. General Motors said its sales fell 3% in 1986, while Chrysler’s sales rose 0.3%. Ford, however, which has suffered from a shortage of cars throughout the year, said its sales fell 9.1%.

In late September, the last 10-day selling-period of the model year, Detroit’s auto makers turned in even worse performances. Inventories of unsold 1986 models ran low following weeks of hectic bargain-hunting by consumers lured into dealer showrooms by discount financing programs, and domestic car sales fell 16.7% during the period from Sept. 21 to Sept. 30, the industry reported Friday.

“You have limited selection left, especially at GM and Ford,” noted Michael Luckey, auto analyst at Shearson Lehman Bros. For the most part, the discount financing programs have not covered newly built 1987 models.

Industry analysts now expect the domestic industry to run into even bigger problems over the next few months. Their sales incentives have already enticed many consumers to move up the timing of their purchases, so when those incentives expire this month, sales of new, higher-priced 1987 models are likely to plummet.

Analysts also note that sales could plunge further early in the 1987 calendar year, when the deductibility of the sales tax on the purchase of a new car will be eliminated by the new federal tax bill.

“The real worry is what happens when the incentives come off,” cautioned David Wyss, an analyst with Data Resources, an economic forecasting firm. “And I don’t see who is going to buy a new car after the first of the year.”

For the entire month of September, meanwhile, domestic sales rose 5.8%, primarily because of the early September boom sparked by the late August introduction of very attractive discount financing programs. Import sales rose even more, however, jumping 22.2% for the month, while total sales increased 9.3%.

The market in light trucks, which has been one of the hottest segments of the auto industry over the last few years, posted a 27.5% sales gain in September, with both the domestic manufacturers and importers reporting dramatic increases.

Auto Sales

Model Yr. 1986 1985 % change GM 4,552,762 4,694,979 -3.0 Ford 1,966,029 2,164,026 -9.1 Chrysler 1,148,627 1,144,682 +0.3 AMC 82,298 137,493 -40.1 VW U.S. 76,410 71,332 +6.8 Honda U.S. 183,629 149,674 +22.7 Nissan U.S. 49,325 21,077 +134.0 DOMESTIC 8,059,080 8,383,263 -3.9 Toyota 612,010 600,759 +1.9 Nissan 511,559 526,002 -2.7 Honda 414,325 379,421 +9.2 Mazda 227,954 184,038 +23.9 Subaru 188,182 151,976 +23.8 Volvo 112,687 100,489 +12.1 VW Imports 145,359 130,381 +11.5 Hyundai NA NA NA Others* 923,872 615,912 +50.0 IMPORTS* 3,135,948 2,688,978 +16.6 TOTAL U.S. 11,195,028 11,072,221 +1.1

*Estimate