GM Not Too Unhappy About Year 2 Date Sales

BOSTON August 1, 2003; Frank Byrt writing for Dow Jones reported that General Motors Corp. reported a 5.5% decline in total U.S. sales in July, but said the performance was the best year-to-date for the company, and better than it expected at the start of the month.

Paul Ballew, GM's executive director of market and industry analysis speaking during a conference call Friday to discuss July sales, characterized it "as a very strong month" for GM, the world's largest auto maker.

July sales were up against a record month last year, so the company faced "a tough month" from a comparative standpoint, he said.

Sales were 458,022 in the U.S. in July down 5.5% from last year. Truck sales were down 1% from 2002, and cars were down 11% from last year's levels.

Ballew said the company estimates it held a 30% market share in July, despite having lower fleet vehicle sales than usual in the month.

But given the company's and the auto industry's overall performance, Ballew said "we're more optimistic than we were a few months ago," despite a very competitive pricing environment as the company is seeing improvement in industry fundamentals and that GM is holding its market share while selling more higher priced vehicles.

It estimates July industry-wide sales were at a seasonally adjusted estimated annual rate of 17.6 million unit pace.

GM had expected it would be at a 17.1 million pace at the start of the month.

It now expects that would bring industry annual sales for 2003 in at the 16.6 million to 16.7 million unit range, Ballew said.

GM started the year with a view of 16.5 million in total vehicle sales for 2003.

The inventory of unsold vehicles was at about 1 million at the end of July, he said, and could creep up slightly later in the year, but inventory remains at manageable levels for the company.

GM's Ballew said the company estimates that July retail sales in the U.S. were down 2% from last year's record level.

He said that incentives across the industry for new car buyers make pricing " very competitive" and that GM "expects to retain our competitive position" in terms of incentives, although GM and its competitors "are all tracking about the same."

He said GM increased incentives slightly in July along with the rest of the industry, noting "that normally happens in a summer slowdown," but he said " there has been no real escalation in incentives beyond what we planned."

He said GM's current goal is to defend its market share and continue to increase sales of its luxury cars, which it classifies as cars that cost more than $30,000.

"We do very well in those higher-priced categories," he said, which includes some trucks and utility vehicles, as well as cars.

Ballew said it appears that homeowners' refinancing their mortgages at low interest rates this year and freeing up cash to buy cars has been a factor in the sustained health of auto industry sales.