GM SEES Blue Skies Ahead

DETROIT March 26, 2004; Michael Ellis writing for Reuters reported that U.S. car and light truck sales are expected to rise roughly 4 percent to an annual rate of about 16.7 million vehicles in March, slightly above Wall Street estimates, a General Motors Corp. official said on Friday.

"We're seeing some sales momentum," Paul Ballew, GM's executive director of market and industry analysis, told Reuters in an interview. "We're starting to see the benefits of economic growth and tax refunds."

The industry's closely-watched sales results won't be reported until next Thursday. But Wall Street analysts have said they expect sales to total a seasonally-adjusted annual rate 16.5 to 16.6 million in March, which some have characterized as a slightly disappointing rise from the 16.1 million rate in March last year.

The start of the traditional spring selling season and warmer weather across much of the country also helped boost March sales, Ballew said.

But some analysts said uncertainty about new job prospects and a modest rise in sales incentives in March may have limited growth in new vehicle sales during the month.

"Although the pace of sales appears to be picking up in March, it will need to start doing double time soon to reach full year expectations," Merrill Lynch analyst John Casesa said in a research note.

Disappointing results in March could force the industry to cut its sales estimates for the year, and automakers to boost incentives to spur sales, some analysts said.

But GM still expects industry sales to strengthen as the U.S. economy recovers, to an annual rate of 17 million, Ballew said.

STRONG TRUCK SALES

Record high gas prices have done little to stop Americans from snapping up sport utility vehicles. Ballew said he expects GM's sales of SUVs, pickup trucks and minivans to be especially strong in March. Cadillac, as well as the overall luxury vehicle market, will also do well in March he said.

GM's sales need to pick up for the automaker to hit its goal of stronger U.S. market share this year.

"We still need to pick up the pace here a bit. We still are not where we want to be in terms of our share," Ballew said.

GM, Ford Motor Co. and the Chrysler arm of DaimlerChrysler AG could all post modest sales gains from weak levels a year ago, when the start of the U.S.-led war in Iraq kept many consumers at home in front of their television sets, analysts said.

Despite the sales gains, Detroit's Big Three automakers could once again lose market share in March, particularly to Japan's Toyota Motor Co. and Nissan Motor Co. Ltd., which have benefited from the roll-out of new models.

Chrysler sales could be helped by its recent hike in consumer incentives to levels rivaling GM, long considered to offer the most lucrative deals in the market, analysts said.

"We expect incentives to rise broadly in March with Chrysler being particularly aggressive as it clears old model inventory ahead of the introduction of nine new models," Goldman Sachs analyst Gary Lapidus said in a report. "We also expect aggressive pricing from Nissan."