GM and Ford sales buoyed by trucks, discounts No. 1 automaker is up 8.2% for April, No. 2 is up 1.1%

Auto industry

May 06, 1998|By BLOOMBERG NEWS

DETROIT -- General Motors Corp. and Ford Motor Co. yesterday reported higher April U.S. vehicle sales as demand for trucks and a new round of discounts lifted the entire industry above estimates.

Sales at No. 1 GM rose 8.2 percent and those at No. 2 Ford rose 1.1 percent, both better than expected.

No. 3 Chrysler Corp. and most Japanese companies last week reported gains as well, and industry sales were up 6 percent through yesterday.

The improvement was fueled by discounts that GM started and its rivals quickly matched in March and April. The incentives, hitting at a time of high consumer confidence, low interest rates and a growing economy, lifted the industry's annual sales rate to about 15.4 million vehicles from 14.3 million in April 1997.

"The rebates helped late in the month to move these numbers above the consensus," said Burnham Securities analyst David Healy. The industry should post more strong results in May for the same reasons, he said.

Yet there will be a payback as discount-driven gains early in the year are offset by declines in the second half, analysts said. The discount war is "making the market look a bit more robust than it probably is," said Bob Schnorbus, director of automotive analysis at J. D. Power and Associates.

Automakers are paying for the big discounts by cutting costs. At GM, for example, incentive spending has risen more than 50 percent this quarter to an estimated $1,600 per vehicle, from $1,060 a year ago. The automaker plans to cut costs this year by $4 billion, up from $3.5 billion last year.

Industry sales for the full year are expected to be unchanged from 1997's 15.2 million.

GM's 8.2 percent improvement in sales of domestic cars and light trucks beat expectations of a 4 percent increase. Sales of its sport utility vehicles, minivans and pickup trucks rose 18 percent to 211,419, making April GM's best-ever truck sales month. Car sales rose 0.2 percent to 178,563.

Sales of full-size Chevrolet pickups rose 21 percent to 56,479 trucks. Chevrolet car sales rose 6.7 percent, helped by gains for Cavalier and Malibu. Even the struggling Saturn small-car division posted a gain of 5.2 percent to 23,355, its best sales month in a year.

Ford's 1.1 percent gain in domestic car and light truck sales beat analysts' predictions of a decline of as much as 2 percent. Ford's domestic car sales rose 2.7 percent, while truck sales rose 0.1 percent.

F-series pickup trucks rose 10 percent to 71,343, and the Explorer sport utility rose 10 percent to 31,182. Sales of the Escort small car rose 5.9 percent, while the Contour small car rose 7.3 percent. Ford no longer makes several car models, such as the Thunderbird, Cougar and Probe, that were available last year.

Volkswagen AG said yesterday that its sales rose 59 percent, while its Audi unit sales rose 31 percent.

April's sales gains are in comparison to a weak year-ago period. Sales were stronger than expected in the first quarter of 1997, pulling in some of the sales that might have occurred in the year-ago month.

Chrysler said Friday that its April sales rose 8.2 percent, while Honda Motor Co. posted a 13 percent increase. Toyota Motor Corp. sales rose 11 percent, while those at Nissan Motor Co. fell 24 percent.

Struggling to reverse a long slide, Nissan said it will reshape its discount and leasing programs and sell down used-car inventories to bolster new-car sales.

Pub Date: 5/06/98

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