Consumers Waiting for Better Incentive Plans, Analysts Say : Auto Sales Off 17% in Mid-March
Sales of domestically produced new cars slid 17.2% in mid-March as consumers continued to show little response to the latest round of incentives offered by the major U.S. auto makers.
According to reports released Tuesday by the seven U.S. manufacturers, they sold 226,712 passenger cars in the March 11-20 period, down sharply from the 273,822 sold in the same period last year.
Industry analysts said the slackened sales pace that has plagued the domestic car companies for the past three 10-day periods results from the replacement of the auto makers’ aggressive consumer campaigns with less attractive incentive programs in late February.
However, analysts predict that Detroit’s Big Three auto makers will introduce more competitive incentives rather than face a dismal spring selling season.
“If car buyers needed an insurance policy in terms of more aggressive incentives from the U.S. manufacturers, they now have one,” said John Hammond, an auto analyst with Data Resources, of the mid-month sales results.
He added that he did not believe that the recent sales declines signaled a weakening in the market but instead were the result of consumers’ dissatisfaction with the current incentives.
“March is sandwiched between strong incentives and the expectation of strong incentives,” Hammond noted. “The poor sales results have not been a reflection of a decline in underlying demand so much as a shifting in the timing of purchases” to coincide with attractive incentives.
Of the major manufacturers, Chrysler posted the biggest decline for the period. The firm said its sales fell to 32,085 units, down 27.1% from last year’s 44,030. General Motors said it sold 123,687 new cars, a 14.6% decline from the 144,851 units sold in the comparable 1985 period, while Ford reported that its sales of 58,729 were off 22% from last year’s 75,332.
American Honda, the only U.S. auto maker to report an increase for the March 11-20 period, said its sales of 5,031 new cars in mid-March represented a 26.2% increase over last year’s 3,985. While Hammond noted that the period’s seasonally adjusted annual rate was low--6.8 million, compared to 1985’s rate of 8 million--he added that he expects sales to increase if more aggressive incentives are introduced.
The annual rate is a reflection of the number of cars that would be sold if a period’s sales pace were to continue for a full year.
AUTO SALES
March 11-20 March 11-20 % 10-Day 1986 1985 change GM 123,687 144,851 -14.6 Ford 58,729 75,332 -22.0 Chrysler 32,085 44,030 -27.1 AMC* 2,100 3,000 -30.0 VW U.S. 2,047 2,624 -22.0 Honda U.S. 5,031 3,985 +26.2 Nissan U.S. 3,033 -- -- TOTAL 226,712 273,822 -17.2
*Estimate
Los Angeles Times
