Vehicle Sales Up 5.7%, but Many in Industry Fret : Autos: They say the outlook is worsening. Anxious dealers have been cutting back on orders.
Car and truck sales were better this October than last, but that isn’t saying much, industry executives, dealers and analysts noted Monday. With some exceptions, they reported a steadily worsening sales outlook.
The 10 companies building cars and trucks in America posted a modest 5.7% daily sales increase over the previous October (904,754 total units sold this year versus 824,148 last year).
That increase, however, masked a falloff in dealer orders that is blamed for upcoming production cuts. Worker layoffs and rollbacks, scheduled for November and December, were announced last week.
“Sales are not the greatest. They kind of stink,” said Jerry Brunner, general manager at Stella Buick in Chicago.
A year earlier, sales in October and November were undercut by elaborate sales contests and discounts in September. They were aimed at unloading unsold 1988-model cars from dealer lots.
Sales were particularly bad last year at General Motors, which helps to explain GM’s relatively strong year-to-year sales increase of 9% in cars and light trucks.
Still, not even GM tried to put on a cheery face. “We expect increased competitive pressures as manufacturers respond to slower dealer ordering patterns due to declining consumer confidence and fluctuating market conditions,” said J. B. Fitzpatrick, marketing vice president.
Despite rising gasoline prices and economic uncertainty since the Aug. 2 invasion of Kuwait, there has been no outright collapse in car sales.
They have generally continued at the weak pace that has prevailed all year, except for certain of the foreign-owned “transplant” auto makers building cars here. Japanese auto makers, selling American-built as well as imported cars in the United States, continue to eat away at the market share of U.S. companies.
GM and Ford Motor Co. reported surprisingly weak financial results last week. They have announced temporary plant closings in November and December, idling tens of thousands of workers. Chrysler Corp. reported a $214-million loss.
Weaker-than-expected earnings were blamed partly on the auto industry’s increasingly costly system of rebates, underscoring how hard it is to sell cars these days. The average rebate is said to exceed $1,200 per car.
Now, dealers nationwide are grumbling about lower customer traffic and weaker sales. In turn, they have slashed new-car orders. Potential buyers “are really holding on to their money,” said Tom Lamberto, sales manager at Gengas Chrysler-Plymouth in Philadelphia.
Analysts said one explanation for the seemingly more favorable sales reports from auto makers--in contrast to dealers’ complaints--is the bigger role played by fleet sales in the overall auto market. Sales to fleet buyers tend to be less volatile than sales to the general public, and October is a big sales month for fleets.
But others, including auto analyst Clifford J. Swenson of Economic Consulting & Planning Inc. in New York, believe that underlying car sales aren’t as bad as suggested by the weak dealer orders. By this line of reasoning, dealers are responding more to predictions of a recession than to how many cars they are selling.
“The dealers at this point are very nervous,” Swenson said. “They’re the ones who end up carrying excess inventory, if sales fall off. We are, overall, very optimistic compared to the general outlook. The industry is planning for a recession, but whether that emerges is another question entirely.”
Sales in October equalled a seasonally adjusted annual rate of 7.1 million domestic cars, Ford officials estimated. That is about what it has been all year.
The Detroit-based companies reported a sales increase of 6.1% in cars but a 1.2% drop in trucks in October. Transplant car sales surged 36.5%, and served to replace sales of imports, which dropped 9.2 %.
Ford car sales slipped 1.6% for the month while Chrysler’s improved 6.3%.
Sales rose 13% at Honda, 138% at Mazda, 23% at Nissan and 73% at Toyota, which said it had the best October in its U.S. history.
“Sales are excellent--very excellent,” said Joe Pestano, sales manager at Downey Toyota.
Mitsubishi sales dropped 1.2 %.
Researcher Amy Harmon in Detroit contributed to this story.
VEHICLE SALES
Oct. 21-31 % change 1990 year to year GM* 143,661 +3.6 Ford* 104,165 +10.4 Chrysler* 58,253 +0.9 Honda U.S. 14,882 -4.6 Isuzu U.S.* 1,259 ** Mazda U.S. 2,927 +159.3 Mitsubishi U.S. 1,532 -1.0 Nissan U.S.* 10,287 +27.7 Subaru U.S. 576 ** Toyota U.S. 14,970 +91.7 TOTAL 352,512 +8.5
*Includes light truck sales.
**No comparison possible.
There were 9 selling days in the selling period this year and last year.
