New Car Sales Leap 30.1% Above Depressed ’88 Level
New domestic car sales jumped a stunning 30.1% in early April, indicating that consumers are responding to a recent flurry of incentive campaigns by Detroit’s Big Three auto makers.
Many auto analysts cautioned, however, that another major reason for the jump was that sales were so weak in the same period last year. The domestic auto industry reported it sold 188,608 units in the period, compared to 144,954 units in the year-ago period. All the U.S. car makers as well as the U.S. operations of foreign car makers reported increases.
“Sales are . . . higher than we expected,” said Theodore Sullivan, an auto analyst with WEFA Group, an economic forecasting firm in Bala-Cynwyd, Pa. “Incentives are partly responsible for it. I think it’s (mainly) just revived consumer enthusiasm brought about by Chrysler’s 0% financing program. . . . It’s bringing people into the showrooms.”
General Motors, Ford and Chrysler have all recently expanded their incentives to counteract this year’s sluggish car market. Sullivan said, however, that the real changes in incentive programs have not been that dramatic. What is dramatic is the amount of advertising that the auto companies are doing to create the awareness.
“I think you have to attribute it to the fortune we’re putting in advertising” to promote the incentives, said Thomas Wagner, general manager of Ford Motor’s Ford division. “The market is really incentive driven.”
Other analysts agreed that the new incentive campaigns had an effect on the amount of sales in the period, but they also stressed that last year’s dismal sales greatly inflated the numbers.
“The primary thing that made sales rise so sharply is that sales were low a year ago,” said Maryann N. Keller, an auto analyst with Furman Selz Mager Dietz & Birney.
“Last year was artificially weak, and this year is artificially strong,” agreed David Healy, an auto analyst with Drexel Burnham Lambert, predicting that sales will be down again soon. “In other words, the 30% gain ain’t going to hold up.”
Sales of domestic vehicles produced by foreign-based auto companies also increased dramatically because of recent production increases on their low volume levels.
AUTO SALES
April 1-10 % 10-Day 1989 change GM 86,110 +20.8 Ford 63,165 +47.0 Chrysler 25,439 +12.4 Honda U.S. 8,082 +44.1 Nissan U.S. 1,624 +40.7 Toyota U.S. 2,700 +420 Mazda U.S. 977 +324 Mitsubishi U.S. 511 - TOTAL 188,608 +30.1
There were 8 selling days in the selling period this year and last year.
