America’s top automakers steadily moved vehicles off their lots in December, with sales rising due to zero-percent financing and rebate incentives. Despite the strong month, dealers couldn’t keep pace with 2001, which was the industry’s second-best year on record.
Still the strong December sales are expected to give the U.S. auto industry one of its best years ever. Much of the sales volume was fueled by profit-shrinking incentives, and serious questions linger about prospects for sales in the coming months.
Automakers around the globe joined in the end-of-year promotions as Detroit’s price war reached new highs, said Paul Ballew, the head of industry analysis and marketing for General Motors.
“This is a bare knuckle, dog-eat-dog industry,” he said. “The Koreans have been as aggressive on vehicle pricing as anybody.”
John Spoon, director of North American sales for Nissan Motor Co. Ltd., agreed. “It’s probably one of the toughest months of incentives I’ve seen since I’ve been in the business. It’s very tough to compete in.”
GM SALES SURGE
General Motors recorded its best December since 1979, with U.S. vehicle sales jumping 36 percent. In addition, it became the first manufacturer ever to sell more than 1.2 million SUVs in a calendar year.
“GM had an excellent year in 2002 on all fronts … exciting new products, quality and productivity improvements — all leading to market share gains and an increased customer base,” said John Smith, vice president of North America Vehicle Sales.
Boosted by aggressive incentives, the automaker pushed to raise its U.S. market share for consecutive years for the first time since 1976.
The world’s largest automaker said sales rose to 473,663 new cars and trucks in December from 362,169 vehicles in December, 2001. The sales results include GM’s Saab unit and some medium-and heavy-duty trucks.
Car sales jumped 37 percent to 172,135 units, while truck sales climbed 35.5 percent to 301,528 units.
GM also said its North American vehicle production estimate for the first quarter was unchanged from its previous forecast of 1.4 million vehicles, including 560,000 cars and 840,000 trucks.
SOLID MONTH FOR FORD
Ford Motor Company, the world’s second-largest vehicle manufacturer, also reported an increase in December sales, although not as sharp as its rival.
Ford said its F-Series trucks were America’s best-selling vehicles in 2002 with sales of 813,701. It marked the 21st year in a row that Ford’s full-size line of pickups topped the U.S. sales charts and the fifth year in a row that sales exceeded 800,000.
Ford also said it was increasing its first quarter 2003 North American production plan by 10,000, to 1.01 million vehicles, because of higher than expected December sales.
Jim O’Connor, head of North American sales and marketing at Ford Motor Co, said the No. 2 automaker’s December incentives averaged about $400 to $500 less per vehicle than GM’s. But industry analysts say Ford and the Chrysler side of DaimlerChrysler AG had not lagged far behind the industry leader.
“Affordability has been very, very important for consumers,” said O’Connor. “It’s a smart time for the smart consumer to buy.”
CHRYSLER’S MODEST RISE
The Chrysler arm of DaimlerChrysler AG saw December sales rise a modest one percent.
The company’s Jeep brand had sales of 45,751 in December, a record for the month. The company’s popular Dodge Ram pickup also set a December record with 34,812 units sold.
The automaker plans to lower first-quarter production from last year’s levels, thanks to higher inventories and expectations of a weak start to 2003, Chrysler CEO Dieter Zetsche said Thursday.
“The very high level of incentives in December will not provide for a great retail January most likely,” Zetsche told reporters during media previews for the Los Angeles auto show. “So we are prepared for a production which takes into account those influences, which most likely will not be a higher number than a year ago.”
Zetsche declined to give an estimate of December’s sales results, saying the final numbers had not been tallied.
Chrysler does not provide specific production figures, but it built 662,000 vehicles in North America in the first quarter of 2002.
The Associated Press and Reuters contributed to this report.