Ford's June sales slide 11% as GM's rise 4.3%

No-interest loans revived to clear out 2002 models

July 03, 2002|By BLOOMBERG NEWS

DETROIT -- U.S. auto sales fell in June, hurt by Ford Motor Co.'s 11 percent decline, but General Motors Corp.'s sales rose 4.3 percent as discounts and newer truck models helped the largest automaker gain market share from its closest rival.

GM and Ford said they revived no-interest loans to clear out 2002 models before their replacements arrive, the companies said.

Sales fell 3.6 percent at DaimlerChrysler AG's Chrysler unit and 0.6 percent at Toyota Motor Corp.

Ford, trying to recover from losses last year and the first quarter of this year, was hurt in June as it declined to match discounts offered by GM and Chrysler. Resurrecting the zero-percent financing shows that Ford and GM are concerned about demand as the U.S. economic recovery sputters and consumers crave profit-eroding discounts, investors said.

"The auto companies have put themselves in a Catch-22; they've put the expectation in people they should get an incentive," said Brian Bruce, who manages $13 billion for Pan- Agora Asset Management, which owns Ford, GM and Daimler-Chrysler shares.

GM estimated that sales fell 2 percent industrywide in June. Analysts had expected the seasonally adjusted annual sales rate to be little changed at 16.8 million vehicles.

Shares of Ford rose 22 cents to $15.74 yesterday; GM fell 41 cents to $50.41; and DaimlerChrysler dropped 89 cents to $46.13.

GM sold 458,876 vehicles including imports and heavy trucks, in line with analyst forecasts. Sales rose at every GM brand except Oldsmobile, which is being phased out. Car sales rose 2.5 percent, and light trucks rose 6 percent.

Sales of the Buick Century, winner of top honors in a JD Power & Associates quality survey in May, rose 28 percent. The company sold 3,466 Cadillac CTS sedans, the basis for a redesign of the company's luxury brand.

Chevrolet TrailBlazer sport utility sales rose 83 percent, and the Cadillac Escalade large luxury sport utility vehicle rose 22 percent. All three minivan models fell more than 11 percent.

Ford sold 337,300 vehicles and its sales have declined 10 percent or more in five of this year's first six months. June's 11 percent decline, which was the same for both cars and trucks, was deeper than the 6.1 percent drop analysts had forecast.

Sales of the Explorer sport utility vehicle fell 7.1 percent and those of the F-Series pickups dropped 16 percent. Those models, which have been among Ford's most profitable, face more competition from rivals including GM and Toyota Motor Corp.

Sales of Ford-brand cars and trucks fell 12 percent, and sales of the Lincoln luxury brand fell 16 percent. Mercury sales rose 4.2 percent, and sales of United Kingdom-based Jaguar and Land Rover rose.

Chrysler said it sold 202,922 vehicles, with cars down 12 percent and trucks little changed. Sales of the Stratus sedan fell 21 percent and those of the Stratus coupe fell 16 percent. DaimlerChrysler's Mercedes-Benz division said sales slipped 3.1 percent.

GM and Ford revived zero-percent financing on some models yesterday. Buyers who qualify can borrow money for as long as five years without having to pay interest. Automakers offer such loans mainly for their drawing power when sales are slow.

GM is offering zero-percent, 60-month loans or $4,000 off on slower-selling vehicles such as Pontiac Aztek and Oldsmobile Intrigue. Saturn, Saab, Hummer and 2003 models are excluded from the offers, which run through Sept. 3.

Ford offered no-interest loans on three models and a choice of interest as low as 0.9 percent or as much as $3,000 cash on other cars and trucks. Buyers who don't want the 36-month, no-interest loans can select from rebates of $3,000 on a Crown Victoria car, $2,500 on an Econoline van or $1,500 on a F-Series Super Duty truck.

Honda Motor Co.'s sales of Honda and Acura models rose 1.8 percent; and Nissan Motor Co. said combined sales of Nissan and Infiniti fell 0.1 percent.

Mitsubishi Motors Corp.'s sales declined 1.9 percent to 22,388; Bayerische Motoren Werke AG posted a 15 percent increase; Volkswagen AG's sales fell 1.3 percent; and Hyundai Motor Co. sales increased 20 percent. Subaru sales fell 8.1 percent.

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