Auto Sales Seen Rising in November

DETROIT Reuters reported that after a record-setting October, U.S. consumers appear to be buying new cars and trucks at a slower but still healthy pace in November thanks to interest-free loans and other deals.

While industry experts had once predicted a sharp drop after the sales push in October, many analysts now say sales will be up this month from a year ago despite the U.S. recession.

Estimates for the seasonally adjusted annual rate of sales in November range from 16.5 million to 18.5 million, well off from last month's record showing of 21 million, but ahead of the 16.3 million pace of November 2000.

Several factors appear to be pushing sales down from October's record. General Motors Corp. and Ford Motor Co. made their loan offers less generous in November, excluding more models and giving zero-percent rates only on three-year loans.

``The majority of (automakers) have extended aggressive incentive programs through the end of the year, but the effectiveness of these programs is fading and December's sales pace is likely to be much slower,'' said Merrill Lynch analyst John Casesa in a research note on Monday.

October's sales boom also depleted inventories of new vehicles, making some models hard to find, and likely pulled ahead buyers who might have otherwise bought in the next several months.

``With consumers initially under the impression that zero percent financing would end Oct. 31, we believe many of those attracted by offers bought a month ago,'' said analyst Saul Rubin of UBS Warburg.

BIG THREE BENEFIT

The sales increase comes despite a long suspected U.S. economic recession that was declared official on Monday, growing unemployment and persistent worries among consumers about the future.

The University of Michigan's measurements of consumer confidence inched up in November, but remained near their lowest level in a decade. Researchers said last week that while zero percent loan offers helped confidence, many consumers were still worried about job losses and declining personal income.

Overall retail sales appeared strong during the Thanksgiving holiday weekend, as many U.S. retailers offered bargains to lure buyers. Auto sales account for about 22 percent of all U.S. retail sales.

As with October, GM and Ford are expected to be the main beneficiaries of the increase, with the Chrysler side of DaimlerChrysler AG seeing flat results. Casesa said GM sales should be up 15 percent, while Ford's sales should be up 10 percent and import automakers may rise about 12 percent.

Some analysts had predicted sales could fall up to 35 percent from October to November, and warned that October's boom would draw hundreds of thousands of buyers from future months.

Automakers had given credence to those predictions by maintaining lower production forecasts despite October's sales boom. But with inventories running low on some models, automakers appear to be bumping up production slightly. Last week, GM ran overtime shifts at six truck plants.

Not all analysts believe November's sales will rise. Art Spinella of CNW Marketing/Research said earlier this month that sales in November could fall as much as 8.5 percent due to less generous incentives and tight inventories.

Sales results are due to be released Dec. 3.