U.S. January Auto Sales Fall 5.2 Percent

DETROIT, Reuters has published a story that stated that Automakers reported a 5.2 percent drop in U.S. auto sales for January on Friday, hit by a slump in demand from rental fleets and a rollback on highly popular zero-percent financing deals.

General Motors Corp.Ford Motor Co. and the Chrysler arm of DaimlerChrysler AG all gained market share late last year, as strong consumer spending and interest-free financing on vehicles helped push the recession-hit U.S. economy into an unexpected expansion in the final three months of 2001.

But automakers suspended most of the zero-percent deals in early January, and that was reflected in a 12.7 percent decline in monthly sales at GM, a 12.6 percent drop at Ford and a 9 percent fall at Chrysler.

Those declines -- which do not include U.S. sales of foreign brands owned by Detroit automakers -- came despite a rise in U.S. consumer sentiment for a fourth straight month, to its highest level in a year, in January.

GM, the world's largest automaker, said it sold 43,000 vehicles less than in January 2001. Nearly 40,000 of the vehicles in that loss came from a drop in sales to bankrupt rental car company ANC Rental Corp. , which runs the National and Alamo rental car chains. GM said its total retail sales were flat, and its profitable truck sales were up 10 percent.

No. 2 automaker Ford also said business fleet sales declines hurt its results, but it saw weakness in the retail market as well.

U.S. light vehicle sales, which account for more than one-fifth of U.S. retail sales, totaled 17.2 million units in 2001. That was the second-highest yearly total in the country's automotive history, despite the recession and economic fallout from the Sept. 11 attacks in New York and Washington.

BELOW EXPECTATIONS

January sales ran at a seasonally adjusted annual rate of 15.8 million. That defied gloomy predictions late last year -- when some industry analysts said January sales could slow to a sub-15 million annual rate -- but was slightly below more recent estimates of a 16 million rate.

And U.S. automakers admitted, even without zero-percent financing, that sales were artificially propped up by aggressive price cuts that erode their profitability.

``The competitive landscape is no less intense,'' said chief Ford sales analyst George Pipas. ``Pricing is the double-edged sword.''

All of Detroit's auto companies have been hurt by the recession, quality problems, overcapacity and tough competition from Asian and European rivals. But Ford, the world's No. 2 automaker, has been hardest hit in the last year. A turnaround plan, which the company unveiled on Jan. 11, will close up to seven North American plants and cut 35,000 jobs worldwide, or about 10 percent of Ford's work force.

There was a bit of good news in Ford's sales results on Friday, which came after a California jury dealt the company a blow by ruling that its popular Explorer sport utility vehicle is defective by design because of its long-alleged propensity to roll over in emergency avoidance maneuvers.

Ford's Jaguar brand said its January U.S. sales rose 87.5 percent while its Land Rover nameplate saw sales jump 133 percent, fueled in part by consumer demand for its all-new Freelander compact sport utility vehicle.

Luxury car maker Mercedes-Benz, a German unit of German-American DaimlerChrysler, also performed strongly, registering a 19 percent gain in January sales.

KOREAN GAINS

Japan's top automaker, Toyota Motor Co. Ltd. , said its sales rose 7.1 percent. Japan's third-ranked automaker Nissan Motor Co. Ltd. said its sales rose 9.6 percent in January, thanks to its fast-selling new Altima mid-size sedan, while No. 2 Honda Motor Co. Ltd. reported that sales for the month were flat against strong results last year.

Other foreign brands that fared well in January included South Korean powerhouse Hyundai Motor Co. Ltd. , which saw its U.S. sales rise 22 percent, and its Kia Motors Corp. affiliate, which reported a 32 percent increase in sales.