AUTO INDUSTRY Sales drop slightly, but discounts soar

GM had the best June sales among U.S. automakers.
DETROIT -- Chevrolet Cavalier sales stayed relatively even in June, while Pontiac Sunfire sales fell.
Backed with $3,000 rebates, sales of the Cavalier have been strong for much of this year. The Cavalier and Sunfire are built at General Motors' Lordstown Assembly Plant.
Last month, Chevrolet sold 24,713 Cavaliers in the United States, which was 1 percent less than the 25,013 sold in June 2001. Last month had one less business day than the same month last year, however.
For the year, Cavalier sales are up 6 percent at 139,611
Sunfire sales last month were 6,844, which was 7 percent less than the 7,336 sold in June 2001. For the year, Sunfire sales are off 7 percent at 41,047.
Better than expected
Overall, automakers reported Tuesday that sales were down only 1.5 percent compared to June 2001.
Strong truck sales and performances from foreign automakers and GM helped buoy the industry that expected to see a marked sales decline last month.
"There is still attractive pricing, higher consumer income, easy financing, low rates and a general expansion of the economy," Burnham Securities Inc. analyst David Healy said in explaining the better-than-expected results.
Of the domestic automakers, GM was the only one to report a sales increase last month with a 4.3 percent improvement over sales in June 2001.
Sales fell 10.5 percent at Ford Motor Co., not including its foreign brands, and dropped 4 percent at the Chrysler Group of DaimlerChrysler AG, the automakers reported.
GM's sales hike was powered by strong sales of its sports utility vehicles and in the company's Cadillac division, according to Paul Ballew, executive director for market and industry analysis at GM.
GM sales were down 2.3 percent for the first six months of the year compared to the first half of 2001.
Meanwhile, the discount dogfight intensified Tuesday, with U.S. automakers rolling out new incentives that would be costly to them even with 2002 shaping up as a respectable sales year.
GM, which seized on zero percent financing after Sept. 11, kept the pressure on rivals by announcing no-interest loans on most 2002 models through Sept. 3. The national program includes rebates up to $4,000.
Chrysler Group, which has mostly avoided the zero percent fray, jumped in with no-interest loans of 60 months on most Dodge, Chrysler and Jeep models.
Ford Motor Co. announced cash-back discounts of $1,500 to $3,500 on most 2002 cars and trucks, through Sept. 30. The automaker also offers low-interest financing and cash back on several models.
Domestic automakers continue to give consumers cheaper loans and more cash back than their import competitors, propping up sales but eroding profits on their cars and trucks.
John Casesa, Merrill Lynch auto analyst, estimated the zero-interest revival would send GM's average discount beyond what the company was spending in the desperate days following Sept. 11.
GM's per-vehicle discounts had soared to $2,664 in October 2001 during the first wave of zero percent financing, according to the consulting firm Autodata. By May, GM had reduced incentives to about $2,241 per vehicle, with Chrysler at $2,457 and Ford at $2,308. The industry average discount was $1,764.
Casesa estimates GM's average discount could now reach $2,777.

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