Domestic Car Sales Fall 38.4% in Early January
Domestic new car sales tumbled 38.4% in early January from the year-ago level to the slowest selling pace posted for the period in 12 years, the seven U.S. auto makers reported Wednesday.
The drop follows a year-end sales surge fueled by the change in federal tax law that will no longer allow consumers to deduct sales tax. Industry analysts noted that many of the sales made in December were borrowed from the future since some consumers purchased cars earlier than they had planned in order to take advantage of the tax savings.
“We expected sales to be low but not this low,” said Michael Luckey, an auto analyst with Shearson Lehman Bros. He added that sales should edge up gradually as the payback effect from the year-end sales boom eases. But he noted that the weak sales pace could leave the auto companies with bloated inventories.
“General Motors days-supply of cars could reach 100 by the end of the month, compared with their 72-day supply at the end of the year,” Luckey said. A 60-day supply is considered normal. “If that happens, they will probably have to cut more production or introduce selective incentives--or both.”
Luckey added that it is unlikely that GM will offer broad-based incentives but rather will opt for individual campaigns on slow-selling models.
U.S. auto manufacturers sold a total of 107,735 cars in early January, down from the 174,954 sold in the comparable 1986 period. An average of 13,467 new cars were sold daily in the period’s eight official selling days, the lowest daily rate since 1975 when an average 11,654 units were sold per day.
Ford reported the largest decline of the Big Three, down 39.2%. GM was not far behind with a 39% drop in sales. Chrysler said its sales fell 36.4% in early January. Among the smaller manufacturers, American Motors reported a 47.7% sales decline and American Honda and Nissan U.S. said their sales fell 33.2% and 12.6%, respectively. Volkswagen of America’s sales were down 59.6% in the Jan. 1-10 period. Toyota, which recently began selling cars it produces jointly with GM in Fremont, Calif., reported 411 sales for the period.
On a seasonally adjusted basis, domestic new cars sold at an extremely weak annual rate of 5.3 million, down from the strong 8.4-million annual rate posted in the same period last year. Sales in the 1986 period were higher than average because most of the auto makers had extensive incentive programs in effect.
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
Jan. 1-10 Jan. 1-10 % 10-Day 1987 1986 change GM 65,309 107,015 -39.0 Ford 24,335 40,057 -39.2 Chrysler 13,185 20,729 -36.4 Honda U.S. 2,116 3,167 -33.2 AMC* 810 1,550 -47.7 VW U.S.* 482 1,193 -59.6 Nissan U.S. 1,087 1,243 -12.6 Toyota U.S. 411 -- -- TOTAL 107,735 174,954 -38.4
*Estimate
Los Angeles Times
