Auto-Industry Price War Fuels Sales
As July Selling Rate Surges,
Dealers Say There Are Signs
Market May Be Overheating
By SHOLNN FREEMAN
Staff Reporter of THE WALL STREET JOURNAL
July 25, 2005; Page A2
DETROIT -- U.S. auto sales are surging in July as Ford Motor Co. and DaimlerChrysler AG enter the employee-discount price war to fight market-share gains by General Motors Corp., dealers and industry analysts say.
The July monthly sales rate is on track to be "somewhere between 18 million and the best ever," according to Bob Schnorbus, chief economist at J.D. Power & Associates. "We could have the best month since 9/11," he said, referring to the 2001 terrorist attacks in New York and Washington.
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According to data from J.D. Power's Power Information Network, through the first 15 days of July, GM's retail sales were up 42% versus the same month a year earlier. Ford's sales rose 27% in the same 15-day period, and sales at DaimlerChrysler's U.S. brands increased 11%. The Power Information Network collects data on actual vehicle sales from 3,600 dealers around the U.S.
Dealers say there are signs that the auto market is overheating. Big dealers say the GM sales in July have been constrained by the lack of inventory after surging sales in June, when GM sold record numbers of its large pickup trucks.
Now people are shopping Ford and the DaimlerChrysler brands for deals. For example, a Jeep Grand Cherokee that sold for about $26,500 before the employee-pricing deal now has an "employee" price of about $24,500. After cash rebates and other discounts such as mail-in coupons or a discount for military personnel or police, the price goes down to $21,500. |
