Auto Sales Continue to Hold Up

Despite a poor showing by troubled Ford Motor Co., the auto industry Tuesday reported strong sales for March and the first quarter of 2002--slightly below last year’s pace but still in near-record territory.

Ford reported an 11.7% drop in March sales compared with the year before, and the industry overall was down 1.6% for the month.

A cutthroat discounting war led by General Motors Corp. has helped prop up the domestic car makers’ sales. But few importers are following, and their strong sales are further evidence of an economic recovery, analysts say.

Industry analysts also point to rising U.S. employment, consumer spending and consumer confidence levels as signs that a broad-based economic rebound is underway.

Most are expecting that to translate into new-car and light-truck sales for the year in the range of 16.3 million to 16.7 million units.

That would be enough to make this the fourth- or fifth-best year on record. Auto makers sold 17.1 million cars and light trucks in the U.S. last year.

“Anything north of 16 million is a very solid sales year,” said automotive analyst Bret Hoselton of Cleveland-based McDonald Investments.

“It’s been amazing,” said Fritz Hitchcock, president of Hitchcock Automotive resources, which owns a chain of six Southern California new-car dealerships. “But retail [passenger vehicle] sales in the first quarter have been stupefyingly good.”

Hitchcock, who owns Toyota, Volkswagen, BMW and Ford dealerships, said volume at his Toyota franchises is up 15% and sales of the other import brands are even with last year.

“The only disappointment is at Ford, which has problems of its own,” he said.

Ford’s problems are linked to a series of quality glitches that have hurt its image with consumers and to a steep drop-off in fleet business as sales to rental car companies withered after the Sept. 11-induced tourism and travel drought.

Sales of new cars and trucks for the first quarter are off 3.3% from a year ago. But as with Ford, fleet sales are down steeply at most companies.

“When you factor that out, retail sales of cars and trucks are actually pretty strong,” said Burnham Securities analyst David Healy. “Conditions are about as favorable as they have ever been in the post-war period,” he said.

Commercial fleet sales were down as major customers continued practicing financial restraint while waiting for the economy to recover, said GM economist Paul Ballew.

Ford said its fleet sales were off 21% for March; retail sales were down just 8%. Ford’s market share dropped to 21.6% for March, down from 24.1% a year earlier. For the first quarter, Ford claimed a 21% share of the U.S. passenger vehicle market, down from 22.9%.

GM, with a 1.7% overall dip in sales for March, reported a 29% drop in fleet sales versus a 6% gain in retail sales, and the Chrysler Group unit of German-American car maker DaimlerChrysler said retail sales were flat while plunging fleet activity dragged down total sales for the month by 4%.

GM and Chrysler both beat their own and industry analysts’ estimates of March sales. Ford--which had double-digit declines in January and February as well--did worse than expected.

For the first quarter, GM’s market share dipped slightly to 28.5% from 28.7% a year earlier and Chrysler Group’s dropped to 15% from 15.6%.

Light trucks, including pickups, minivans and sport utility vehicles, continued to account for more than half of all sales with a 51.1% share for March and a 51.9% share for the first quarter.

Despite its other woes, Ford recaptured the pickup truck sales crown for March as its F-series trucks squeaked past GM’s Silverado line.

Among import brands, Toyota Motor Sales USA posted a 4.1% sales hike for March. The largest of the importers, Toyota had a 10.4% market share for the quarter and is the only import brand to hit the double-digit mark in the U.S.

Toyota’s Lexus brand led the luxury market with a 1.4% share, followed by Mercedes-Benz at 1.3%, Acura unit at 1%, Cadillac at 1% and Lincoln at 0.9%.

Including its Acura unit, American Honda Motor Co. posted a 2.1% sales gain for March and a 7% market share for the first quarter.

Nissan North America, the No. 3 import brand, saw sales jump 14.2% in March. Its market share for the first quarter rose to 4.8% from 4.2%. Honda brand sales alone were up 1.9% for March and Acura sales rose 3.3%.

March sales at Volkswagen of America, including its Audi and VW units, were up 6.7% and the company’s share of the first-quarter market rose to 2.4% from the year-earlier 2.3%.

GM economist Ballew said domestic car makers’ discount programs, such as GM’s $2,002 rebates on most models and Ford’s $2,500 cash-back plans, have kept sales running 4% above the 16-million annual pace that the general economy could support unaided.

GM, the only domestic car maker to post a profit last year and the only one expected to do it this year, is keeping the pressure on.

The company said Tuesday that it will extend its rebate and discount interest program through April 30.

Ford, whose program expires April 8 and whose cash reserves are dwindling, said it will wait a few days before announcing whether it will follow GM’s lead.

Chrysler, which is offering up to $2,500 rebates on many vehicles, is expected to keep pace with GM.

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