Discounts Jump-Start September Auto Sales

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DETROIT — Big cash incentives and last-minute, no-interest financing deals are expected to pull September auto sales out of a recent swoon, but analysts predict GM and Ford could continue to lose market share.

September sales got off to a slow start, in part because of hurricanes in the southeast, but General Motors Corp. responded by raising discounts and offering zero-percent financing for 72 month loans on 2004 models. Ford Motor Co. matched the deals.

Major automakers are counting on a rebound when September sales are released Friday, after a 12 percent decline in August. Japanese automakers Toyota Motor Co.p., Honda Motor Co. and Nissan Motor Co.p. are expected to post solid gains. DaimlerChrysler AG’s Chrysler Group is forecast to report strong sales, bolstered by its popular Chrysler 300 sedan and Dodge Magnum wagon.

“We were anticipating a very strong September,” said Jeffrey Schuster, who heads the global forecasting services department at J.D. Power and Associates. “Throw in the new incentives and you could see an additional kick.”

A surge on incentives in the final days of September should help GM and Ford improve on dismal August results. But analysts say they won’t keep pace with overall market gains. GM and Ford cut planned vehicle production in the fourth quarter, which could hurt profits.

At Tom Holzer Ford in Farmington Hills, the new incentives are doing the job.

“We are clearing out a lot of the ‘04 inventory, which is exactly what they wanted to do,” said Brian Burke, sales manager.

Scott Montgomery, sales manager at Les Stanford Chevrolet in Dearborn, says the dealership sold 26 vehicles Tuesday — compared with about five on a typical Tuesday. “This deal has exceeded my expectations tenfold,” Montgomery said.

GM’s six-year, no-interest offer was enough to convince Daniel Hoy, a truck driver from Taylor, to browse the showroom at Les Stanford, where he bought a 2004 Chevy Colorado pickup.

“The deal was right,” said Hoy, 55. “It’s just like shopping at a grocery store, you’re looking for the best bargains you can.”

The latest deals are expected to boost the annualized selling rate this month to as high as 18 million units, up from previous estimates of 17 million to 17.5 million units. Last year, September sales reached an annual rate of 16.9 million.

The annualized rate indicates how many vehicles would be sold in an entire year if sales continued at the same pace for all 12 months.

John Casesa, an analyst with Merrill Lynch & Co., is more cautious.

New models help Chrysler

GM and Ford likely lost market share in September, he said, while DaimlerChrysler probably gained ground, helped by new models.

“The new round of incentive programs underscores our view that despite recent production cuts, the industry — and GM in particular — would rather push demand than reduce supply,” Casesa said in a recent research report.

Asian automakers are also expected to rebound after a weak August.

“We’re still looking for the Honda, Toyota, Nissan trifecta to have another strong month,” said Shuster.

In addition to inclement weather, high energy prices and waning confidence in the economy are leaving some consumers cautious.

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[ponchoman49]

It's too bad GM didn't get there act together and bring out the G6, Cobalt, LaCrosse and displacement on demand a few months ago. It's one day from October and all I have seen at the dealerships is a couple of G6's. These new products would have bolstered sales much better than some of the current products. I know at least 10 families who are waiting for the new 05 models before they buy cause they are sick to death of the old hat designs. They don't want the 1997 style Gm minivans or the 1997 Century or Regal or the 1995 Cavalier. Can't say I blame them.

[maccars]

This is a mess. The consumer is addicted to rebates and in this market, the pushers are slowing killing themselves instead of the addicts.

You have to remember that dealerships - and the industry, as a whole - live and die on 30 day numbers. All the GM numbers types in Detroit are trying to do is save a miserable September and 3rd quarter of 2005. They will worry about October and 4th quarter `05 later.

You are partially right about the "pushers" point. The incentive landslide has become a habit, and may well be unstoppable. With 2001-2004 buyers now buried in their prospective trades (myself included - my 0% `02 Avalanche is worth $13,500 on a $17,000 balance), the big rebates are almost necessary for them to be able to trade.

Like I said before - a viscious circle. Really viscious.