Sales of Domestic Autos Climb 22.6% in Early October

Domestic new car sales rose 22.6% in early October as consumers hurried to take advantage of cheap financing on leftover 1986 models before the cut-rate loan programs ended last week.

The seven U.S. auto makers reported Tuesday that they sold 247,623 new cars in the Oct.1-10 period, compared to 202,004 in the comparable 1985 period. There were nine official selling days in both periods.

The discount loans, introduced in late August to reduce bulging inventories of unsold cars, boosted sales to record levels in early September before diminished inventories of 1986 models slackened the pace.

Low Inventories

The programs were so successful, in fact, that at the end of September U.S. auto makers only had a 35-day supply of cars in dealer hands while importers had a 38-day supply. According to Ward’s Automotive Reports, a weekly trade publication, the number of unsold 1986 models on dealer lots were reduced last month by 54% at General Motors, 50% at Chrysler and 35% at Ford. A 60-day supply is considered normal.

Industry observers predict that sales will fall sharply now that the incentives have ended. “Now that the incentives have expired, sales should nose dive and the current low inventory should build up again over the next couple months,” said Harvey Heinbach, an auto analyst with Merrill Lynch in New York.

“The (domestic) auto makers will be faced with the same problem they had before, and they will have to make a choice between another round of incentives or production cuts,” Heinbach added.

GM reported the largest sales gain of the Big Three in early October, up 28.6%, while Ford and Chrysler said their sales rose 23.3% and 2.5%, respectively.

On a seasonally adjusted basis, domestic new cars sold at an annual rate of 7.9 million in early October, compared to a 6.4-million annual rate in the 1985 period. The annual rate is a reflection of the number of cars that would be sold if a period’s sales pace were to continue for a full year. Auto Sales

Oct. 1-10 Oct. 1-10 % 10-Day 1986 1985 change GM 137,030 106,549 +28.6 Ford 60,423 49,004 +23.3 Chrysler 39,367 38,394 +2.5 AMC* 2,680 2,465 +8.7 VW U.S. 1,310 1,510 -13.2 Honda U.S. 5,203 2,060 +152.6 Nissan U.S. 1,610 2,002 -20.4 TOTAL 247,623 202,004 +22.6

*Estimate