Automakers Bullish on Prospects for Rest of 2003 Despite October Sales That Were Nearly Flat

DETROIT November 4, 2003; John Porretto writing for teh AP reported that automakers are generally bullish on prospects for the rest of the year despite October sales that were nearly flat compared with a sluggish month a year ago.

"It's certainly not enough to dissuade us in our increasing optimism regarding the direction of the economy and the impact that will have on the industry," Paul Ballew, General Motors Corp.'s executive director for market and industry analysis, said Monday after the world's largest automaker reported a nearly 8 percent drop in sales last month.

Domestic sales at both GM and No. 2 Ford Motor Co. declined more than predicted as a late summer sales frenzy prompted a larger-than-expected industry backlash.

But the slack in business was not felt uniformly. DaimlerChrysler AG's Chrysler Group, aided by heavy consumer incentives, said it had an 11 percent sales increase from a soft month a year ago.

European automakers Mercedes-Benz and BMW both had their best Octobers on record in the United States. And the domestic arms of Toyota Motor Corp. and Nissan Motor Co. reported double-digit sales growth on the strength of a variety of new or revamped vehicles.

"Our new products are kicking in and adding volume," said Jed Connelley, Nissan's senior vice president of U.S. sales and marketing, referring to the automaker's revived Quest minivan and first full-size SUV.

GM's overall sales fell 7.7 percent from a year ago. Truck sales were off 8 percent, car sales nearly 7 percent.

Ford's domestic business fell nearly 3 percent as strong demand for its new F-150 pickup failed to offset a sharp decline in car sales.

Sales of Ford, Lincoln and Mercury cars were off 9.3 percent, while truck sales rose nearly 1 percent.

Ford sold 68,828 F-Series trucks in October, 12 percent more than a year ago. Ford's F-Series pickup is the best-selling vehicle in the United States, and it accounts for about one-quarter of Ford's sales.

The new F-150, beefier than the previous model, went on sale in September and is considered a vital part of the company's turnaround bid.

Despite October sales that were below predictions of some analysts, Ford officials said they were optimistic about sales prospects as the year winds down.

"The economy is sprinting, and consumer fundamentals remain favorable," said Jim O'Connor, Ford's group vice president for North American marketing, sales and service.

Industrywide, October sales were expected to top last year's sluggish levels, when a sputtering economy and fears of a war with Iraq hurt business.

But last month's volume was forecast to be well below the levels of August and September, when the introduction of 2004 models and a barrage of incentives on '03 models sparked a summer selling craze.

The predictions were correct.

The seasonally adjusted annual sales rate for October was 15.6 million units, a fraction ahead of last October but not even close to August's pace of 19 million units. The sales rate, known as SAAR, indicates what sales for the full year would be if they remained at the same pace for all 12 months.

Dave Healy, an analyst with Burnham Securities, had predicted a sales pace of 16.3 million units for October.

"The hangover from August lasted longer than I thought," Healy said, noting the California wildfires also likely contributed to softer-than-expected sales.

At Chrysler, a nearly 11 percent decline in car sales was offset by 16.6 percent growth in truck volume, spurred by the Dodge Ram pickup.

The Ram had its second-best October ever as sales climbed 46 percent from the year-ago period. Another bright spot was the Pacifica crossover vehicle, which recorded its seventh consecutive month of increased sales since a troubled launch in March.

Nissan's total sales, including the luxury Infiniti division, rose 18 percent. Toyota, with its luxury Lexus line, said sales grew 11 percent in October, a result that pleasantly surprised the company.