Auto Sales on Track for Strong 2003 Finale
Tuesday, December 30, 2003
DETROIT — U.S. auto sales are expected to end 2003 on a high note, with strong December sales of new cars and trucks fueled by a fresh round of incentives and an improving economy.
Industry analysts say auto sales should hit a seasonally adjusted annual rate of about 17.9 million vehicles in December, pushing sales for all of 2003 to roughly 16.6 million vehicles. Automakers are due to release December sales figures on Monday.
While such a result would be down from last December's 18.2 million rate, which was driven by General Motors Corp.'s (GM) year-end drive to maintain its U.S. market share, it would still be stronger than November's results and taken as a sign of healthy demand among consumers.
"December will be a big month, fueled by ever higher incentives," said Merrill Lynch analyst John Casesa in a research note. "In a stock market that wants to believe in a strong economic recovery, December auto sales will provide a supporting data point."
As has been typical for the past few years, domestic and foreign automakers have piled on the deals in the final two weeks of December to boost their totals, although to a lesser degree than in the past.
DaimlerChrysler AG's (DCX) Chrysler arm appears to be the most aggressive among Detroit's Big Three, offering six-year interest-free loans and advertising cash rebates of up to $6,000 on some older models. GM and Ford Motor Co. (F) have offered less generous incentives nationwide, with additional $500 or $1,000 rebates and five-year no-interest loans.
But Detroit isn't alone in pushing deals before the new year. Toyota Motor Corp. (search) is pitching five-year no-interest loans on its Corolla sedan in some regions, along with cut-rate loans and rebates on several other models, including the Camry sedan.
Given all the dealing, analysts say sales could end up higher than their estimates depending on how hard automakers decide to push. Casesa expects GM's December sales to be flat to down 5 percent compared with December last year, Ford sales to be down 10 percent and Chrysler's sales to be down about 3 percent.
"Ford can really get squeezed between GM's market share push and Chrysler's big spending campaign," he said.
If sales for all of 2003 end at 16.6 million, it would be a small decline from 2002's total of 16.8 million, but also the weakest year since 1998. Much of that decline came in the first half of the year, and sales have run at higher rates since August as U.S. consumers saw their incomes grow and their job prospects strengthen.
Art Spinella, an industry analyst with CNW Marketing & Research, said his data shows an increasing number of U.S. households have more cash left over at the end of the month, and more vehicle buyers are paying cash rather than taking out a loan.
"As consumers have more cash on hand, more money in the bank, so to speak, they are increasingly willing to avoid interest payments and write a check," he said.
With the U.S. economy growing quickly now, automakers are looking ahead to a stronger 2004, with sales hitting 17 million vehicles. |
