Incentives Power Auto Sales on Pace to Make ’01 Second-Best Year Ever
Stoked by zero-interest financing programs and the continued strong appeal of trucks, U.S. auto sales set a record for November and kept the year on track to becoming the second-best in history at about 17.1 million units.
Although the Chrysler Group domestic arm of DaimlerChrysler saw November sales slip, General Motors Corp. and Ford Motor Co. both had record months, and many Asian importers are looking not only at monthly peaks but at record years as well.
Analysts caution, though, that the blistering year-end sales pace is almost entirely attributable to customers looking for bargains.
Low-and no-interest sales plans launched by GM in the wake of the Sept. 11 terrorist attacks and matched by other companies are compelling tens of thousands of consumers into buying months sooner than they would have and will contribute to a downturn in sales next year.
Ford, struggling with losses and undergoing a massive reorganization, underscored the anticipated sales drop Monday by announcing it will cut first-quarter production 9%. The auto maker also said it will eliminate 630 hourly and salaried jobs at a New Jersey assembly plant and cut some benefits for white-collar employees as part of an effort to save $300 million a year. Ford confirmed that it will suspend matching contributions to 401(k) plans for its 45,000 U.S. salaried employees, trim payments for employee health benefits and eliminate merit pay increases for top executives.
November’s sales “definitely show that price works, that you can buy more sales by cutting prices,” said Van Bussmann, head of global auto industry forecasting for J.D. Power & Associates, the Agoura Hills consulting firm.
“But these numbers also say that product still is king,” he said, singling out companies such as Honda Motor Co. of Japan that have posted strong sales gains without offering big incentives. That, he said, “means people still value quality and reliability.”
At GM, which is set to end a 10-year slide in its U.S. market share, November’s sales were up 13% from a year earlier, principally on the strength of the company’s redesigned lineup of pickup trucks and sport-utility vehicles--their popularity assisted by the discount financing the auto maker launched as the way to prop up a post-Sept. 11 economy.
Industry analysts have noted that consumer interest in gas-gulping light trucks--pickups, SUVs and minivans--remains strong despite uncertainty about the stability of imported oil supplies.
Ford, which also saw strong sales of its light pickups and Escape compact SUV, said November sales in the U.S., excluding foreign brands, were up 5%. But Ford sales analyst George Pipas said the strong October and November showings are unsustainable.
“We definitely see December’s sales rate coming in lower,” he said, warning that “the payback from October’s extraordinary sales and November’s strong sales” will be a sharp slowdown over the next three months.
Chrysler Group, which hasn’t had many new products to excite consumer interest, said November vehicle sales fell 6%. Sales of the Chrysler PT Cruiser, the new Jeep Liberty SUV and Chrysler and Dodge minivans remained strong.
Among foreign-based auto makers, Toyota Motor Corp. continued its drive to become the first import brand to end the year with a 10% share of the domestic market. Toyota’s November sales in the U.S. were up 9.7%, and its year-to-date market share was 10.1%.
Sales at Honda rose 11.5% in November, bolstered by a big jump in light-truck sales after the early-November launch of a redesigned CR-V compact SUV and an increase in production of the popular Odyssey minivan.
Nissan Motor Co., which had seen sales sag most of the year because of a lack of new products, posted a 6.9% gain in November on the heels of the launches of its all-new Altima and a revamped Maxima.
Mitsubishi Motors Corp., the No. 4 Japanese brand in the U.S., said monthly sales soared 27.1% to an all-time record. The company recently introduced a new compact, the Lancer, and is heavily promoting a zero-interest plan.
European auto makers, which have not jumped on the low-cost financing highway, generally posted weak gains or weak dips for November, with sales for all European imports up just 1.8%.
