Led by General Motors Corp., domestic automakers posted strong sales in December as consumers continued to take advantage of generous incentives to boost the auto industry to its fourth-best year ever.
The industry sold 16.8 million cars and light trucks in 2002, down 2 percent from 2001 but much higher than most analysts predicted a year ago. December’s sales of 1.4 million autos were nearly 9 percent higher than the same month in 2001.
It was still the second straight year of declines after a record 17.4 million cars and trucks were sold in 2000. Most analysts expect sales to drop again this year because of economic uncertainty and a lack of pent-up demand among consumers.
GM sales rose 36 percent in December thanks to incentives that forecasting firm CNW Marketing/Research estimates reached nearly $3,700 per vehicle by month’s end. In addition to enticing consumers with rebates and zero-percent financing, GM juiced sales by offering dealers $500 or more per vehicle to meet sales quotas.
GM closed the year with a 28.6 percent market share, up from 28.3 percent in 2001. It was GM’s first back-to-back increase in share since 1976.
Sales at Ford Motor Co. were up 8.2 percent for December, giving the No. 2 automaker a happy finish to an otherwise discouraging year. Ford’s sales fell nearly 9 percent for the year, and its market share slipped 1.6 points, to 21.5 percent.
December sales increased 1 percent at the Chrysler Group, the domestic unit of DaimlerChrysler. For the year, Chrysler was off 3 percent and its share dipped to 13.1 percent.
While GM spent heavily for little gain, Japanese carmakers made significant advances with lower incentives. Toyota sales were up nearly 1 percent for the year, Honda climbed 3.3 percent and Nissan was up 5 percent.
Combined, the top three Japanese manufacturers increased their slice of the industry pie by 1 point, to 22.2 percent.
Korea’s Hyundai Group, which sells the Hyundai and Kia brands, continued to take a bigger chunk of the market. Sales of the two brands rose 7.4 percent, to 612,464, good for 3.6 percent of the market–more than tripling sales since 1998, when Hyundai and Kia sold a combined 173,110 vehicles.
GM defended its free-spending ways and signaled it will not ease incentives in 2003. On Friday GM extended until Feb. 28 zero-percent financing for up to 60 months on many 2003 models and added a new wrinkle on a handful of lower-priced models–1.9-percent interest on 72-month loans.
The six-year financing is available on older models such as the Chevrolet Cavalier and S-10 pickup and also on the recently introduced Pontiac Vibe and Saturn Ion.
Paul Ballew, GM’s market analyst, said the longer loan was designed to combat lower-priced Asian models that are stealing small-car sales.
“That’s a very price-competitive area of the business,” Ballew said. “We’re not breaking new ground in this area. Other manufacturers have been there already.”
Ford, for example, offers 72-month loans on most models at 4.9 to 5.9 percent.
After GM reduced incentives during some months last year, sales fell. Ballew admitted that was a mistake.
“We’re not going to sit back and let competitors take it to us. Those days are over,” he said. “This is a bare-knuckles, dog-eat-dog business. It’s important for us to stay on the offensive.”
Ford and Chrysler had no immediate response to GM’s incentive programs. Both are scheduled to announce new ones Monday.
Despite Ford’s overall poor performance in 2002, sales Vice President Jim O’Connor said the carmaker improved its net revenue per vehicle by about $600 in the fourth quarter partly by being more judicious with incentives.
“We took a very disciplined and analytical approach to our incentives,” he said. “We were able to stabilize our revenue in a very tough market. As we improve our products, we intend to gradually improve our share.”
