Vehicle Sales Up, but Pace Is Slow at State’s Dealers : Autos: Purchases of U.S.-built cars hit a nine-month high, but dealers in California may have had a harder time because of the new 1.25% sales tax increase.
The auto industry’s fragile recovery continued to gain strength in July as the pace of car and truck sales hit their highest level in nine months.
U.S.-built and imported vehicles sold at an annual rate of 13.1 million in July, marking the first time since October that a sales rate has topped 13 million. July’s sales rate was preceded by rates of 12.9 million in June and 12.4 million in May, reflecting the industry’s gradual upturn.
But industry observers continue to temper their optimism with a healthy dose of caution.
“It looks like we’re on the right track for gradual improvement,” said Susan Jacobs, an analyst with Jacobs Automotive in Little Falls, N.J. “No big gains, but at least dependable, moderate increases.”
California auto dealers may have also had a harder time than most in July as prospective customers reacted to the new 1.25% sales tax increase by staying at home.
“After the tax changes we had a lull,” said Curtis Floit, sales manager at Walker Buerge Ford in West Los Angeles. “It’s the psychological factor; people just think they don’t want to pay that much.”
Although Floit’s experience was echoed by several dealers, most agreed that the tax hike would not slow sales for long.
“After a while they’ll forget about it,” said John Cabe, co-owner of Cabe Bros. Toyota in Long Beach.
Cabe is more worried about the long-term effect on sales of what he sees as a flooded market.
“Things didn’t get worse in July,” Cabe said, “but we’re still not making money. There’s just too many cars out there.”
Robert Rewey, Ford Motor Co.’s vice president for sales operations, noted a modest improvement in the retail climate, but added that “we still anticipate that the near-term market recovery will be gradual, due to underlying economic weakness.”
And several auto dealers said no matter what the economists say, selling cars to finicky consumers is still slow going.
“Sales were improved last month versus the month before,” said Ali Hosseinion, general sales manager at Reuhman BMW in North Hollywood, who nevertheless disagrees with those who say the industry is beginning a slow climb out of the recession. “We’re all still having a hard time.”
In an effort to help dealers get rid of the remnants of one of the worst sales years in decades as the end of the model year approaches, some auto makers have initiated or expanded existing low-financing programs and deals that promise the consumer money back on his purchase.
“There was an enormous amount of incentive activity during the month, and I think the annual rate was helped a little by that,” Jacobs said. Ford is offering consumers the choice between financing rates of 2.9% to 7.9% or rebates from $500 to $2,000 on a range of vehicles. Chrysler Corp. increased incentives on several models and added others to its rebate program, while General Motors Corp.’s Cadillac division will pay consumers $1,500 and $2,500 on different 1991 models.
Auto Sales Seasonally adjusted annual rates for U.S. cars and trucks. Domestic figures include vehicles built in the United States by Japanese auto makers. The figures use seasonal patterns to predict the auto industry’s sales rate for a full year.
In millions of cars 1990 Domestic / Import Jul.: 14.2 Aug.: 13.7 Sep.: 14.4 Oct.: 13.5 Nov.: 12.7 Dec.: 12.7 1991 Jan.: 11.1 Feb.: 11.8 Mar.: 12.4 Apr.: 11.2 May.: 12.4 June.: 12.9 July.: 13.1 Source: U.S. Department of Commerce Americans bought 1,166,516 cars and trucks in the month, down 5% from July, 1990.
The Big Three U.S. auto makers posted a combined sales decline of 7.6% for the month of July, compared to July, 1990. Chrysler led the way with a 15.5% skid. Ford sales fell 8.3%, while GM sales dipped a more modest 4.5%.
Major Japanese auto makers fared considerably better than their U.S. rivals in July, posting a combined increase of 5.2% in car and truck sales, compared to sales a year ago. Toyota sales jumped 12.5% and Nissan sales 17.3%. Honda sales were down 17.6%.
* LEXUS BEATS MERCEDES
Toyota’s division topped a key industry survey of car buyer satisfaction. D5