Big Three Auto Sales

[HarleyEarl]

Tuesday, December 20, 2005 Print this Comment on this E-mail this Auto sales limp in December Despite dropping market share, Big Three show slight improvement after a dismal November. Josee Valcourt / The Detroit News Tim Boyle / Getty Images North America General Motors Corp. launched its annual red tag sale earlier than usual this year to boost year-end sales. Ford is offering a similar deal, while Chrysler is plying year-end customers with two years of free gas on some models. See full image Detroit automakers continued to lose retail market share to foreign rivals in early December but showed modest signs of improvement compared with their dismal performance in November. General Motors Corp., Ford Motor Co., DaimlerChrysler AG's Chrysler Group, as well as Korea's Hyundai Motor Co., lost retail market share during the first 11 days of the month, according to a survey by the Power Information Network, an affiliate of J.D. Power and Associates. Toyota Motor Corp. and Honda Motor Co. posted market share gains in early December, while Nissan Motor Co. remained flat. Overall, new vehicle sales dropped 14 percent industrywide during the first 11 days of December compared with the same period a year ago. In recent months, auto sales have been sluggish as some car discounts waned and rising energy costs drew consumer dollars elsewhere. "The industry is sort of moderating. During the fall we saw some major drops, which most people contributed to payback for the summer (sales)," said Tom Libby, senior analyst at Power Information Network. The report is based on transaction data collected from roughly 10,000 dealers nationwide and doesn't include sales to fleet customers. Helped by a new round of discounts, Ford and GM are slowly pulling out of their slumps following the summer sales events. GM launched its annual red tag sale earlier than usual this year to boost year-end sales. Ford is offering a similar deal, while Chrysler is plying year-end customers with two years of free gas on some models. GM, Ford and Chrysler captured about 50 percent of the retail market in early December -- compared with 53.6 percent at this time last year. It was an improvement over November. Overall, U.S. new car and truck sales have increased about 1 percent this year through November. Paul Taylor, economist for the National Automobile Dealers Association, said the industry probably will fall short of the 17 million unit mark for the fourth straight year. "It's a combination of incentives that are not strong and ads that do not communicate the urgency about new car deals," Taylor said. Typically, sales are slow during the first half of December as consumers spend on general merchandise and Christmas gifts, said Chris Lemley, who owns several Ford and Lincoln Mercury dealerships in Boston. Sales could heat up by the end of the month as automakers and dealers push to finish the year on a strong note. "Our expectation is that we will see a flurry of fleet sales in the second half of the month," Taylor said, referring to sales to rental car companies and bulk orders from companies and government agencies. "But it will not be enough to make the month anything to celebrate madly." On a positive note, the Power Information Network found while sales slowed a tad more for the first two weeks of December compared with 2004, new vehicles are sitting on dealer lots for a shorter period of time. In early December, new cars and trucks sat on dealer lots an average 54 days versus 68 days for months of October, November and December in 2004. One reason for the improvement could be that carmakers have cleared their 2005 inventory and consumers are now sliding into 2006 models, Libby said. The trend indicates less incentive spending and dealers spending less on interest accrued for cars and trucks that sit on lots, he said. Doug Wilson, owner of a Hyundai, Kia and Dodge dealership in the Jackson, Miss., area, said sales for Hyundai vehicles excluding the new Sonata sedan have been slow. Yet sales of Dodge cars and trucks have been healthy during the past two weeks.