August Vehicle Sales 'Extremely Strong'

ST. LOUIS September 3, 21003;Desiree J. Hanford writing for Dow Jones reported that the entire auto industry had an "extremely strong" August for car and truck sales, said Paul Ballew, General Motors Corp.'s executive director of market and industry analysis.

The industry will be "at or near record territory" for sales last month, Ballew said during a conference call Wednesday afternoon to discuss August sales.

The auto industry had total sales of about 1.65 million vehicles in August, Ballew said. GM expects total industry vehicle sales for the calendar year to be in the high 16 million range, perhaps 16.8 million to 16.9 million, he said. Light vehicle sales for the industry will be about 16.5 million for the year, Ballew said.

There are a number of positive trends in the industry and at the world's largest auto maker, Ballew said. The economic recovery "is gaining some traction," industry vehicle sales are "holding up" beyond expectations and product sales mix is improving, he said.

GM feels more optimistic about the direction of the economy, the industry and the auto maker's performance compared with the rest of the industry than it did a few months ago, Ballew said.

GM's vehicle sales were mixed in August. Total vehicle sales at GM last month declined 0.5% to 472,427 cars and trucks. That compares with 492,435 vehicles in August 2002. There were 27 selling days in August, compared with 28 days in August 2002.

Hurt by an 18% decline in fleet sales, GM's auto sales slid 8% to 188,298 from 212,369 in the year-ago period.

Truck sales rose 5% to 284,129 from 280,066 in August 2002. August 2003 marked the fourth time in the last five months that GM set an industry record for truck sales.

Earlier Tuesday, GM said it's extending most of its incentive program, including cash back and low or 0% financing, for 2003 models until Jan. 2.

The auto maker is also offering incentives on several 2004 models, a program that expires Sept. 30. Also, GM is offering extra cash back on some 2003 and 2004 pickup trucks and most 2003 sport utility vehicles. That program also expires at the end of the month.

The Hummer is excluded from all the incentive offers.

If the economy continues to gain traction in 2004 and the economy grows about 3.5%, which is GM's expectation, volume and pricing may improve next year, GM's Ballew said. That type of environment could lead to some "firming up of the downward pressure" on prices next year, he said.

Although it's too early to say that prices have ebbed for the auto industry, there are some signs that the rate of decline might be leveling off, Ballew said. The pricing environment "remains very tough" and while GM feels better about pricing than it did six months ago, it remains "cautiously optimistic" about it, Ballew said.

As for GM's sales performance in August, Ballew said that some of the positives included another strong month for trucks and a good month for the Chevrolet, GMC and Cadillac brands.

One of GM's challenges continues to be having older vehicles in some segments, Ballew said. The auto maker plans to start addressing that as it roles out new cars and trucks in coming months and quarters, he said.

During the question-and-answer session, Ballew said that GM plans to remain " very aggressive" on incentives for its 2003 models so that those cars and trucks can get off showroom floors.

Between 85% and 90% of GM's August sales were 2003 models, Ballew said. Current year models account for about 45% of GM's remaining inventory, he said.

The power outage in mid-August had no effect on GM's sales, Ballew said.

"It was one of the most consistent months I've ever seen," he said.