Big 3 sales shrank in Nov.

Demand weaker

`hangover effect' from June, July

December 02, 2005|By KNIGHT RIDDER/TRIBUNE

DETROIT -- Detroit's automakers racked up another dismal month of U.S. sales, due to weaker demand for sport utility vehicles, while most foreign brands posted stronger results.

General Motors Corp., Ford Motor Co. and Chrysler Group posted lower sales after the blockbuster results this summer, including record industry sales in July, reduced demand in the fall, officials said.

"We are coming off a sales spike in June and July ... and there is a hangover effect associated with that," GM's sales and marketing analyst Paul Ballew told reporters and Wall Street analysts.

Sales for GM fell 7.7 percent in November and Ford dropped 15 percent, while both Chrysler Group and owner DaimlerChrysler AG slipped about 3 percent.

The race between Chevrolet and Ford for the best-selling U.S. brand of 2005 tightened last month. Chevy still leads, but Ford narrowed the gap between them to 12,815 vehicles, with one month to go.

Nationwide, consumers bought 1.17 million passenger vehicles last month, a decline of 2.8 percent from November last year, according to Autodata Corp. That bettered the sharp drop of 14.1 percent in October, when industry sales hit the lowest levels for the month in 13 years.

Hyundai Motor Co. led the charge among major foreign automakers, with a 12.5 percent gain in sales.

Toyota Motor Corp. posted its strongest results ever for November, with a 10 percent sales gain. Honda Motor Co. sales jumped 10.8 percent, and Nissan Motor Co. reported a 3.9 percent drop in results.

To boost sales, the Detroit automakers launched new incentives in mid-November. Falling gas prices and rising levels of consumer confidence should also help spur consumers to return to dealerships, they said.

"We think the case is there for a pretty strong showing in December," said Gary Dilts, Chrysler Group senior vice president of sales.

He noted that last year industry sales rose 25 percent in December from November, and the recent drop in gas prices should help matters.

But even with the lower gas prices, sales of traditional sport utility vehicles, such as the Chevrolet Suburban and Ford Explorer, dropped sharply from last year's levels.

Sales of SUVs, pickups and minivans for Ford's six brands dropped a combined 17.9 percent, while GM reported a drop of about 13 percent in its combined light-truck sales.

Automakers ratcheted up sales incentives again in November after pulling back from the offers earlier. The average sales incentive totaled an estimated $2,413 per vehicle last month, up $401 from October, according to automotive information Web site

Among Detroit's three automakers, Chrysler Group raised incentives the most, by an estimated $882 per vehicle to an average of $3,922, said. That was followed by GM at $3,255, up $556, and Ford at $3,137, up $452.

George Pipas, Ford's U.S. sales analyst, readily agreed that the Detroit automakers increased incentive spending "by a notable amount" in November. He declined to provide specifics on Ford's spending.

GM and Chrysler officials disputed the incentive figures supplied by outsiders such as, though they didn't reveal actual numbers. Ballew said GM's incentives were down about $100 a vehicle. Dilts said Chrysler raised incentives by a few hundred dollars.

Chrysler told Bloomberg yesterday that it would increase rebates by as much as $1,000 on 2005 models and as much as $500 on 2006 models. Combined with other offers, buyers could get as much as $8,000 off some models, Bloomberg News reported.

Last week, Chrysler launched an offer of two years of free gasoline and scheduled maintenance. The Miles of Freedom deal, to end Jan. 2, includes a five-year warranty on most Chrysler Group vehicles.

Dilts said the free gas attracts some consumers who aren't swayed by its traditional cash-back incentives. "For sure, it's brought some curiosity and interest into the showroom," he said.

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