Auto Sales Seen Rebounding in April

DETROIT April 25, 2003;Michael Ellis writing for Reuters reported that the winding down of the Iraq war and aggressive incentives boosted U.S. new car and truck sales in April from weak levels earlier this year, analysts said.

U.S. consumer confidence surged above economists' forecasts in April, rebounding from a nine-year low in March during the Iraq conflict, according to the University of Michigan's widely watched index of consumer sentiment released on Friday.

"'Iraq-nophobia' should have subsided by this point," said Peter Glassman, senior domestic economist with Bank One Corp. "Now (consumers) might be heading out to the dealerships a little bit more."

Most analysts generally expect April's light vehicle sales to hit a seasonally adjusted annual rate of 16.7 million, up from a low of 15.3 million in February, but down from last April's strong 17.2 million rate. Chrysler officials expect sales of about 16.6 million to 16.7 million, said spokesman Marc Henretta.

J.D. Power and Associates, which tracks U.S. vehicle sales daily, said sales could hit 17.4 million, boosted by record high incentives, stronger consumer confidence and a rebound in sales to fleet customers such as daily car rental companies.

"Sales have been improving over the course of the month," said J.D. Power chief economist Bob Schnorbus. "The setting is being laid for a good finish to the month."

General Motors Corp. kicked off April by offering what it described as its most aggressive incentive program ever, expanding its zero percent financing offer to five-year terms across all brands except Hummer.

Ford Motor Co. and the Chrysler arm of DaimlerChrysler AG quickly followed with zero percent financing offers of their own.

Incentives paid by automakers rose in the first two weeks of April by about $100 per vehicle from March levels to about $3,366, according to Oregon-based CNW Marketing Research, which tracks auto sales.

However, many analysts said that sales incentives are losing their effectiveness and the Big Three U.S. automakers are expected to lose more ground to their foreign rivals.

"We are definitely seeing a weakening in demand and it tracks very closely with consumer confidence," GM Chief Executive Officer Rick Wagoner told reporters in Washington earlier this month after meeting with President Bush.

Some analysts said that Chrysler's sales could fall 10 percent or more, while sales for GM and Ford will likely fall by single digit amounts.

"We'd expect some fairly ugly year-to-year sales comparisons for the Big Three," said analyst David Healy of Burnham Securities.

Honda Motor Co. Ltd. is expected to be the big winner this month. One analyst said Honda's truck sales could be up more than 40 percent due to the launch of the new Honda Pilot and Honda Element sport utility vehicles.

The automakers are scheduled to release their April results on May 1.