Carmakers’ US Discount Spree Boosts Economy

02 August 2002

Stateside auto sales in July hit their highest rate this year, thanks to zero percent finance deals and other incentives.

The biggest gains were made by General Motors where sales soared 24% to 465,843 vehicles, whupping Ford Motor Company’s relatively meager +1.5% and those of several European and Asian marques.

US car sales during the month burgeoned year-on-year by 8.2%, totalling 1,523,158 units. Projected to a seasonally adjusted annualized sales total, 2002 seems likely to move 18.1 million new vehicles (cars and light trucks), compared with 16.5m calculated to the same formula in July 2001.

“A very comforting sign,” opines General Motors chief market analysts Paul Ballew. “We believe the economic fundamentals remain generally positive,” he added.

And demonstrating that deeds count more than words, GM announced plans to increase third-quarter production in North America by 2% to 1.262 million vehicles – while warning that “inventories are likely to remain tight for the next several months”.

GM's 0% financing promotion is scheduled to end in early September, presaging the arrival of its 2003 models, likewise Ford. But GM and other manufacturers/importers don’t expect any relaxation of competitive pressures that might lead to the scaling back of discounts.

Bucking the bull trend was DaimlerChrysler’s Chrysler Group, where sales declined 4%, due to the falling popularity of its Jeep SUVs and Dodge Ram pickup trucks. The major foreign automakers reported sales gains but lagged behind the overall rise in the market

The luxury end of the market was red in tooth and claw: “All luxury brands are competing on prices,” sighed George Pipas, chief sales analyst at Ford. “Everything is negotiable in this price environment – with everybody.”

Data sourced from: The Wall Street Journal Online; additional content by WARC staff