Car Sales Up 3.5% in Early March Despite GM’s Slide
Despite a 13.0% slide by General Motors, domestic auto sales rose 3.5% in early March compared to the year before, the eight major U.S. auto makers reported Tuesday.
And the overall increase seemed to surprise forecasters, who attributed much of the increase to a continuation of cut-rate financing and other consumer incentives.
“Sales were stronger than I expected,” said David Healy, an automotive analyst with Drexel Burnham Lambert. “GM was off, but the other auto makers--Ford and Chrysler--more than made up for it. . . . The timing of the incentive programs affected Ford and GM market shares in early March.”
Confusion over how long GM would continue its sales incentives, previously scheduled to end in February, seemed to hurt the No. 1 auto maker’s sales in early March, analysts said. Both Ford and GM extended their consumer incentive programs into March.
Healy suggested that consistently stronger-than-expected sales numbers in 1988 may be a product of the new tax reforms. “The combination of the drop in income tax rates and the closing of a lot of tax shelters for high bracket individuals is putting more of the free cash into automotive dealerships this year.
Short Supply
“I think 1988 will turn out to be a better year than auto manufacturers and analysts” originally projected, he said.
“These are pretty good numbers,” concurred Thomas F. O’Grady, an auto analyst with Integrated Automotive Resources, a Wayne, Pa., automotive research firm. He speculated that GM’s drop in sales was caused by low inventories of certain popular models.
For instance, GM has just a 37-day supply of the Oldsmobile Cutlass Ciera; the domestic industry considers a 60-day supply normal. Another well-received GM model, the Buick LeSabre, has a 46-day supply.
“GM no question, was short of many of their most popular models,” O’Grady said. He speculated that GM would probably have been at least even with last year’s early March sales if they had had more of the most popular selections in stock.
Among the “Big Three” U.S. car companies, GM’s sales dove 13.0%, netting it a 45.0% share of the domestic automotive market. Ford’s sales rose a hefty 21.4%, and it boasted a 32.5% market share. Chrysler’s sales were up 18.3%; it took a market share of 16.4%.
Ford, in announcing its sales figures, bragged that its early March car sales were the second-best ever in Ford’s history. And the combined sales of cars and light trucks made the March 1-10 reporting period its best ever, surpassing the 1979 record.
Honda, after replenishing its supply pipeline, sold 71.9% more vehicles than it did a year earlier. Honda’s sales were down 15.0% in the first week in February and down 4.9% for the month, largely due to a lack of inventory on dealer lots.
Nissan, which recently announced its first-ever customer cash-back incentive program on some of its cars and trucks, sold 19.7% fewer cars than it did last year.
AUTO SALES Percentage changes in auto sales for the first 10 days of March are based on daily rates rather than total sales volume. There were nine selling days in the current period and eight in the year-ago period.
March 1-10 March 1-10 % 10-Day 1988 1987 change GM 95,372 97,487 -13.0 Ford 68,859 50,407 +21.4 Chrysler 34,667 26,046 +18.3 Honda U.S. 8,496 4,394 +71.9 VW U.S.* 777 849 -18.6 Nissan U.S. 1,931 2,137 -19.7 Toyota U.S. 1,110 500 +97.3 MazdaU.S. 560 -- -- TOTAL 211,772 181,820 +3.5
*Estimate
