Auto Industry Reports Mixed Sales

Thursday, November 2nd 2000, 12:00 am
By: News On 6

DETROIT (AP) — U.S. automakers reported mixed sales results for October, with slumping results at Ford Motor Co. and DaimlerChrysler AG and strong gains at General Motors Corp. thanks to customer incentives.

With a few smaller automakers yet to report results Thursday morning, U.S. auto sales for October appeared down about 2 percent.

Ford Motor Co., which had production problems because of faulty air bag parts, said sales were down 6 percent, while the Chrysler arm of DaimlerChrysler said sales were down 8 percent.

General Motors, which has been offering bargain loans on 2000 model year vehicles, said sales of cars and light trucks were up 6.6 percent.

GM sales incentives included no-interest loans with terms of up to five years on several 2000 model year cars and mid-size sport utility vehicles. Excluding Saab, car sales were up 6.7 percent, while truck sales were up 6.6 percent.

GM's Oldsmobile division reported its first year-over-year gain in 2000, with sales up 13 percent. The company offered a program for some buyers to forego a down payment, monthly loan payments and interest charges for one year on all Oldsmobile models.

Paul Ballew, GM's director of sales analysis, said the company had been cautious with its incentives, and would not ``turn on the spigot'' just to prop up sales. It did announce a new slate of low-interest loans on full-size pickups — a market that has not needed many incentives until now.

``Our strategy is to gain share and maintain volume, but to do so profitably,'' he said. ``We're not out there aggressively spending money and becoming a discounter.''

Excluding Ford's foreign brands, which include Jaguar and Volvo, car sales were down 11 percent and truck sales were down 3 percent. Ford said one reason for the drop was a problem with air bag sensors that had held up production of the Ford Crown Victoria/Mercury Grand Marquis full-size sedans and the Ford Windstar and Mercury Villager minivans.

The problem stems from a faulty air bag part that could malfunction and cause the air bag to deploy or seat belts to tighten up. Ford has not been able to get enough replacement modules, and has about 40,000 vehicles waiting for the parts — half at two Canadian factories, the other half at its dealerships.

Ford sales analyst George Pipas said the company would halt production at two Canadian plants next week to reduce the number of vehicles waiting for parts, and could extend the shutdown if inventories aren't reduced more.

Car sales also declined at Ford as the company ends production of its Ford Contour/Mercury Mystique models.

Sales of the Ford Explorer were down 16 percent, a drop Pipas said was mostly because of the Firestone tire recall. And sales of Ford's top-selling F-Series pickups were down 11 percent, a development Pipas said was troubling.

``It's a very competitive segment, and it's something we're going to have to watch, because on an ongoing basis it's unacceptable,'' he said.

Chrysler's car sales fell 20 percent, while its truck sales were down 4 percent. Jamie Jameson, DaimlerChrysler's vice president for sales and marketing operations, said the company was struggling to keep up with its competitors' loan incentives.

``We've announced for November and December some incentive actions of our own,'' Jameson said. ``In this kind of market, you just can't back away from the table. ... If you do back off, the market will punish you and it will punish you quickly.''

Among Chrysler's new incentives are reduced leases for the company's brand-new 2001 minivans, a vehicle Chrysler had hoped it could sell without incentives. The company will take an average of $1,800 off the cost of a lease to consumers; a 2001 midline Dodge Caravan would now lease for $379 a month with $999 down.

``This is about as intense and competitive incentive-driven market as we've ever seen,'' Jameson said. ``Even with the best minivan ever, you've got to be there with what the consumers also perceive as a viable financial package.''

Foreign automakers also reported mixed results. Toyota said its sales were down 6 percent, while Honda said its sales were down 5.5 percent. Nissan said sales were down 3.6 percent.

Mercedes-Benz said sales were up 3.5 percent.