U.S. Car Sales Sink 20% in Late June as Incentives Fail
Car and light truck sales plummeted 20% in late June, compared to strong sales in the same period last year, auto makers reported Wednesday.
The average sales rate among the eight U.S.-based auto makers for the June 21-30 period this year was 26,811 vehicles a day, down from a daily rate of 33,495 during the same time in 1988. Last year turned out to be the second best year in industry history.
Among the Big Three auto makers, Chrysler’s car sales were off 28.6%, General Motors’ were down 23.4%, and Ford’s were off 22.5%.
‘Incentives Aren’t Working’
Analysts and auto makers said the drop wasn’t as serious as the figures suggest because sales in late June last year were so strong. However, it appeared that incentives designed to spark car sales during the period this year haven’t been as successful as auto makers had hoped for.
“It’s obvious that incentives aren’t working,” said analyst Kathleen Heaney of Nikko Securities Co. of New York.
For the month, with imported auto makers’ figures included, car and truck sales were down 11.4%, going to a daily rate of 49,635 vehicles from a rate of 56,032 during June of last year.
Through the first half of the year, vehicle sales were off 6.8%, with car sales falling 7.6% and truck sales declining 5.3%.
“Because June of 1988 was such an exceptionally strong sales month, unfavorable year-to-year comparisons were anticipated,” said Robert Rewey, Ford sales vice president. “We continue to be encouraged by the underlying strength of the U.S. economy. Consumer confidence remains strong, buoyed by record employment levels and moderating inflation.”
Analyst Jeannette Garretty of the Bank of America in San Francisco agreed that confidence remains sound.
“Although consumer confidence is holding up, the message is clearly being sent that the economy is slowing down,” she said. “And that’s got to be on people’s minds a bit.
“Something that is not showing up in the numbers directly is that holders of adjustable-rate mortgages have seen a major increase in their payments . . . and that has eaten at their pocketbook.
“When it comes between the house and the car, the house is going to win out,” she added.
For months, analysts and others have said a downturn in the sales rate is likely. However, auto makers, with some adjustments, have kept up production levels, meaning inventories have remained at higher-than-usual levels.
“It’s too late in the year for them to do anything other than to say, ‘Gee, the market is very weak and we have to get the cars out the door,”’ Garretty said. “I think they are at a loss at what to do there. There can only be more financing deals, more rebates or giveaway option packages.”
Chrysler Leads the Decline
Heaney agreed.
“I want to see what they are going to do, what type of incentives are they going to use to clear out these ’89 models?” she said.
In late-June car sales, Chrysler led the decline, falling 28.6% to an average daily rate of 3,237 units this year, compared to 4,535 a day last year. The company’s car sales for the first six months of the year were down 14.9%.
Truck sales by Chrysler were off 12.8% during the June 21-30 period this year and were down 0.7% so far this year compared to last year.
GM’s car sales fell 23.4% in late June to an average daily rate of 12,267 this year from a rate of 16,023 last year. For the first six months of the year, GM’s car sales were off 9.6%.
For light trucks, GM’s sales fell 23.6% for the period and 3.4% for the year through June 30.
AUTO SALES
June 21-30 % 10-Day 1989 change GM 110,404 -23.4 Ford 69,719 -22.5 Chrysler 29,129 -28.6 Honda U.S. 11,768 -13.3 Mitsubishi U.S.* 1,101 -- Nissan U.S. 5,874 -2.7 Toyota U.S. 11,467 +274.0 Mazda U.S. 1,833 +22.6 TOTAL 241,295 -20.0
*Estimate
