January Turns Sour for Auto Makers as Sales Decline 28.3%
New car sales slid 28.3% in January from the year-ago level as both domestic and import manufacturers reported declines for the month.
According to reports released Wednesday by the auto makers, 623,678 new cars were sold last month, down from the 870,272 sold in January, 1986.
Auto industry observers noted that sales were expected to be off following the blockbuster sales performance most of the auto companies posted in December. Customers were urged to buy by the end of last year before the new tax law--which eliminated sales tax deductions--took effect at the beginning of 1987.
The eight domestic auto makers reported that they sold 427,678 cars last month, a 32.7% decline from the previous year. In the final 10-day sales period of the month, domestic sales were off 25.8% from the comparable 1986 period, an improvement over the first two periods in January when sales were down 38.4% and 36.9%, respectively.
General Motors reported the steepest decline of Detroit’s Big Three manufacturers, down 38.2% for the month. Ford said its sales fell 27.5%, and Chrysler reported a decline of 31.6%.
Prompted by slumping sales and growing inventories, GM announced late last month that four of its divisions would offer various incentives on selected models. The incentives, which are scheduled to expire April 30, range from discounts on options to $1,000 rebates. Ford and Chrysler followed suit with consumer campaigns which include low-rate financing or rebates on certain models. In addition, GM announced a new six-year warranty for major repairs on its new cars. This has prompted other auto makers to respond with improved warranty plans.
John Hammond, a partner at J. D. Power and Associates, an automotive market research firm, noted that so many sales were pulled from the future last year by incentive programs and the tax reform that “it will take more than a single leap to get out of the doldrums.” He added, however, that the incentives “ultimately will provide significant support to the market--just not a big bang.”
All of the major Japanese auto makers reported a drop in sales for the month. Toyota said its sales were off 35.3%; Honda reported a decline of 29.4%, and Nissan said its sales were down 3.7%. Mazda and Subaru had declines of 41.9% and 46.2%, respectively.
Auto Sales
% Jan. 1987 1986 change GM 232,507 376,353 -38.2 Ford 108,270 149,380 -27.5 Chrysler 53,453 78,195 -31.6 Honda U.S. 19,898 13,263 +50.0 AMC* 2,421 6,389 -62.1 VW U.S.* 2,819 6,321 -56.2 Nissan U.S. 6,569 6,003 +9.4 Toyota U.S. 1,741 -- -- DOMESTIC 427,678 635,904 -32.7 Toyota Imports 29,305 45,285 -35.3 Nissan Imports 35,967 37,337 -3.7 Honda Imports 26,149 37,018 -29.4 Mazda 11,043 18,993 -41.9 Subaru 8,998 16,740 -46.2 VW Imports 5,574 10,505 -46.9 Volvo 12,553 11,684 +7.4 Hyundai 18,006 -- -- Others* 48,405 56,806 -14.8 IMPORTS* 196,000 234,368 -16.4 TOTAL U.S. 623,678 870,272 -28.3
*Estimate
