Domestic Auto Sales Slump 9.8% Despite Incentives

Sales of new domestic cars dropped 9.8% in early May despite broad sales incentives, the auto industry reported Monday.

In fact, Detroit’s most recent round of sales incentives have failed to buoy significantly a slumping car market since they were introduced in late March, and many analysts now believe that sales won’t rebound any time soon.

“The sales cycle we’ve been in may just be slowing down,” said Thomas O’Grady, an auto analyst with Integrated Automotive Resources, a Wayne Pa.-based automotive research firm. He added that a major reason for the slowdown is that consumers are saddled with too much debt, including burdensome long-term loans on their existing cars.

Christopher Cedergren, an auto analyst with J. D. Power & Associates, an Agoura Hills-based market research firm, agreed that the overall market is sliding but added that most of the problem can be traced to the Big Three. He noted strong sales of cars built in the United States by the Japanese and included in the 10-day domestic reports.

In fact, because of those “transplants,” Cedergren argues that the Big Three will never again sustain the market positions they held just two or three years ago.

Near Recession Levels

“If you take just the Big Three, and remove the transplants . . . the Big Three are almost down to recession levels,” said Cedergren. “It’s basically a domestic, or a Big Three phenomenon, this turndown in the market.”

“I think that the Japanese auto manufacturers have an opportunity of increasing their market share 6 percentage points in the next three or four years,” said Cedergren.

Cedergren added that Detroit’s auto makers need to adjust both their incentive programs and their production schedules to keep their inventories of unsold cars from ballooning.

AUTO SALES, May 1-10

Percentage changes in sales are based on average daily sales during each period rather than of straight totals. There were nine selling days in the period this year and eight last year. DOMESTIC CARS

Units % chg. GM 103,990 -9.5 Ford 60,258 -11.1 Chrysler 29,612 -14.6 Honda 8,494 +6.9 Nissan USA 1,042 -53.0 Toyota USA 2,624 +220.4 Mazda USA 639 +30.3 Mitsubishi 694 N/A TOTAL 207,353 -9.8 DOMESTIC TRUCKS General Motors 49,929 +6.1 Ford 41,715 -11.9 Chrysler 28,123 -9.3 Nissan USA 1,599 -41.6 TOTAL 121,366 -5.35 Comb. Total 328,719 -8.2

Source: Associated Press