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GM, Ford Post Soft January Sales

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From Reuters

General Motors Corp. and Ford Motor Co. on Tuesday posted disappointing U.S. vehicle sales for January, and both said they would trim production further.

GM and Ford, which lost U.S. market share last year to Asian rivals, entered 2005 with high inventories of unsold cars and trucks, and had announced plans in December to cut production before shaving the outlook further Tuesday.

“Not a great month. A little softer than we expected,” said Paul Ballew, GM’s executive director of global market and industry analysis.

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Ford indicated that sales incentives could climb further.

Sales across the industry fell to 1.06 million vehicles in January, down from 1.13 million in January last year. Sales fell to a seasonally adjusted annual rate of 16.2 million vehicles, down slightly from the 16.3-million rate in January last year. January 2005’s 16.2-million rate was also off sharply from December, when heavy incentives pushed results to the highest level since the record month of October 2001.

Snowstorms across much of the United States kept consumers away from dealerships, industry officials said.

“Business continued to be good and solid into January, but our sales were definitely affected by the winter storms in the Northeast and Southeast,” said Jed Connelly, Nissan’s head of North American sales and marketing.

The Chrysler side of DaimlerChrysler reported a 9% gain in sales to 148,111 units, boosted by strong results for its new cars. Asia’s Hyundai Motor Co., Toyota Motor Corp. and Nissan Motor Co. reported stronger results, but Honda Motor Co. posted weaker sales.

GM, the world’s largest automaker, said sales rose 1.1% to 274,939 vehicles, excluding its Saab brand and some medium- and heavy-duty trucks.

Ford posted a 5.4% fall in U.S. sales for January, its eighth straight month of weaker results. Some analysts had expected Ford to report slightly stronger results.

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Ford said sales dropped to 185,492 vehicles in January. The results exclude heavy trucks and its foreign brands, such as Volvo, Jaguar and Land Rover.

Incentive activity was muted in January after December, when the industry launched its traditional year-end offers. But George Pipas, Ford’s head of sales analysis, said that higher incentives could appear soon.

Particularly worrisome for GM and Ford were weaker sales of their mid-size and full-size sport utility vehicles, which have been a key component of their profitability, said Peter Langlois, analyst for the Ernst & Young Global Automotive Center.

“When you’re talking about how profitable these things have been over time, whether it’s [GM’s] TrailBlazer or [Ford’s] Explorer, it causes me a little bit of concern that the shift has been as dramatic as it has been.”

GM cut its expected first-quarter production in North America by an additional 25,000 vehicles, or 2%, to a total of 1.225 million cars and trucks. Ford trimmed its first-quarter North American production by 10,000, or about 1%, to 920,000 vehicles.

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