GM Is Hardest Hit as U.S. Auto Sales Tumble 16.3%

Led by a sharp decline at General Motors, domestic auto sales fell 16.3% in mid-January, the seven U.S. auto manufacturers reported Tuesday.

A total of 155,973 units were sold in the 10-day period, compared to 186,385 units last year.

Analysts said it was likely that the weak sales were a reflection of stronger than expected sales in late December. A sales push at the end of 1988 created artificially high sales rates in December, analysts noted, and many of these transactions were “borrowed” from sales that would have gone through in early to mid-January.

“December sales kind of borrowed from this year’s sales, because sales incentives were so strong” in December, said Cynthia Certo, an automotive analyst with Integrated Automotive Resources, a Wayne, Pa., automotive research firm.

The weak selling rate is “a continuation of the hangover effect in early January,” agreed David Healy, an automotive analyst with Drexel Burnham Lambert. He added, however, that in light of the fact that the auto makers now are offering broad sales incentive programs, the mid-January auto sales still should have been better. “If cars have a weak selling rate in the next 10-day period,” he said, “you’ll have to start looking for a new explanation for the weak sales.”

Some analysts suggested that the current sales slump can be attributed to a lack of new and exciting 1989 models. They said many buyers are waiting for the introduction of several new models this spring.

Among Detroit’s Big Three auto makers, GM’s sales fell hardest, with a 21.9% plunge. GM suffered most from the hangover effect, analysts said, because it gained the most from the end-of-the-year sales push. Ford’s sales dropped 13.6%, while Chrysler suffered least, dropping 10.0%.

“GM probably suffered more than everyone else because they had one of the most aggressive incentive plans last year,” said Certo. “They had a better December than everyone else.”

Among the foreign auto companies that produce cars in the United States, Honda was the only company to report falling sales of its domestic vehicles. Honda’s sales fell 2.2%. Nissan, Mazda and Toyota all reported substantially increased domestic sales, due to recent expansions of production capacity at their U.S. plants.

AUTO SALES

Jan. 1 % 10-Day 1989 change GM 70,745 -21.9 Ford 52,577 -13.6 Chrysler 22,156 -10.0 Honda U.S. 6,304 -2.2 Nissan U.S. 1,945 +13.7 Toyota U.S. 1,571 +131.7 Mazda U.S. 675 +86.5 TOTAL 155,973 -16.3

There were nine selling days in the selling period this year and last year.