December Domestic Auto Sales Off to Strong Start

AUBURN HILLS, Mich. December 20, 2002; The AP reports that domestic sales of new cars and trucks appear headed for a strong finish to the year, though further incentives are playing a large role and could crimp profits, analysts and auto executives say.

In a research note Thursday, Goldman Sachs & Co. said General Motors Corp. is powering December sales with hefty incentives as the world's largest automaker strives for a slight market share increase this year.

Such a feat would mark the first time since 1976 that GM would record back-to-back years of market-share gains.

However, Goldman Sachs said, the push is not coming cheaply. GM has raised incentives by $585 a vehicle in December, which the investment bank estimates will result in a $115 million net loss.

No. 2 Ford Motor Co., on the other hand, has boosted incentives by $200 a vehicle this month, Goldman Sachs said.

Goldman Sachs said it expects December's U.S. seasonally adjusted sales rate for all light vehicles to be 6 percent better than both last month's and last December's tallies.

In another report Thursday, Burnham Securities Inc. analyst David Healy also cited GM incentives as a reason why December sales should top November's.

At the start of December, GM announced a holiday financing package for several 2003 sport utility vehicles. DaimlerChrysler AG's Chrysler Group also improved financing terms on most Dodge and Chrysler minivans and Ford beefed up offerings on some SUVs and pickups.

Market share for domestic brands at Detroit's automakers -- GM, Ford and Chrysler -- plunged to just below 60 percent in November, the lowest ever, amid continuing growth by Asian and European competitors.

Industrywide, U.S. car and truck sales fell 13 percent last month compared with November 2001, when fresh incentive programs ignited vehicle sales.

Still, boosted by heavy, incentive-laden volume earlier this year, total U.S. light vehicle sales are expected to be between 16.5 million and 17 million at year's end, one of the best years on record.

Automakers report December and year-end U.S. vehicle sales Jan. 3.