GM's Chevrolet May Pass Ford as No. 1 U.S. Auto Brand

Detroit Oct. 29, 2004; Bloomberg reported that General Motors Corp.'s Chevrolet brand may surpass Ford Motor Co.'s namesake brand in car and light-truck sales for the first time in 18 years, as car sales help Chevy and cause Ford to slide.

The Ford brand's lead over Chevrolet narrowed to 8,303 cars and light trucks through September, according to Autodata Corp. A year earlier, Ford's lead was more than 20 times bigger, at 203,612 vehicles. Chevrolet will leapfrog Ford in year-to-date sales this month if Chevrolet maintains its average monthly advantage of 32,951 vehicles in July through September.

The Ford-Chevy race highlighted a month in which U.S. auto sales probably rose compared with October 2003 while falling below the pace in September, the year's second-best month, according to analysts and economists surveyed by Bloomberg News. A Federal Reserve survey found weakness in several U.S. regions. Automakers report sales Nov. 3.

Ford and General Motors depend on the their best-selling brands to fend off Asian and European rivals, such as Toyota Motor Corp., which have increased their share of the U.S. market to 41 percent from 26 percent in the last decade.

The Ford and Chevrolet brands shape the fortunes of their companies. Ford Division's U.S. sales fell 4.4 percent through September; Ford Motor Co. total sales, including models such as Lincoln and Mercury, dropped 4.7 percent. Chevrolet's sales rose 5 percent, helping General Motors to a 0.9 percent gain.

Historic Rivalry

The rivalry spans most of the past century. When Chevrolet joined General Motors in 1918, seven years after being started, it was positioned to compete with Ford's original Model T, according to the 2002 book ``Chevrolet Chronicle.'' Chevrolet passed Ford in 1931 and held the title almost every year until 1986, according to the trade publication Automotive News.

A reversal of positions may give Chevrolet a new marketing tack. Ford has trumpeted its status as the No. 1 brand during its 18-year reign.

``Chevy would tell you it does matter, and Ford would explain it away,'' said Kevin Tynan, an analyst with Argus Research in New York. ``All that said, I don't think Ford wants to see Chevy's name on top.''

Chevy `Has to Grow'

``Chevy has to grow for GM to be successful,'' Paul Ballew, chief sales analyst for Detroit-based General Motors, said in an interview. He declined to forecast whether Chevy would pass Ford this month or on a year-to-date basis.

Ford Motor Chief Executive William Clay Ford Jr. said this year he's willing to sacrifice market share to boost profitability of models. Ford, of Dearborn, Michigan, has reduced sales to rental-car companies, where profits are low or nonexistent.

``The idea of pulling out all the stops to save a sales leadership, that's just not on our radar screen,'' Ford Motor sales analyst George Pipas said in an interview.

Chevrolet's sales of light trucks rose 1.2 percent through September; Ford's fell 0.4 percent. The bigger swings have been in cars.

The General Motors brand raised its car sales by 14 percent during the first nine months, helped by the new Aveo and a redesigned Malibu, according to Autodata. Ford brand's car sales have declined 15 percent, including a 17 percent drop by the Taurus, Ford's top-selling car.

New Fords

Bill Ford is counting on new models, which have lower incentives than existing cars and trucks, to generate sales and raise profits. October results will include the first sales for the new Five Hundred sedan, which partially replaces the Taurus, and the Freestyle sport-utility vehicle. A redesigned 2005 Mustang sports car also is reaching dealerships.

Ford expects to sell 2,700 Five Hundreds and 1,300 Freestyles this month, about 25 percent more than previously planned, Marty Collins, Ford division general marketing manager, said in an interview. About 35 percent of Freestyle buyers and 40 percent of Five Hundred purchasers traded in non-Ford brand vehicles, he said.

Ford set a target to sell 30,000 of the new models in the current quarter and 60,000 in the first quarter of 2005 as the Chicago plant that makes them increases production, Collins said.

Ford isn't offering cash rebates on the Five Hundred and Freestyle. Ford is offering financing as low as 1.9 percent for 36- month loans and 3.9 percent for 60-month loans.

`An Improvement'

The new vehicles ``are an improvement, and Ford needed something new out there,'' said George Magliano, director of auto research for Global Insight, a forecasting firm in Lexington, Massachusetts. The models may help Ford hold off Chevrolet, he said.

Analysts and economists surveyed by Bloomberg expect October to yield sales of 16.7 million cars and light trucks on an annual basis, up from 16.1 million in the year-ago month.

The sales pace probably was below September's rate of 17.5 million vehicles, according to the forecasts.

General Motors and Ford last month offered six-year, no- interest loans to boost sales and reduce inventory of 2004 models on dealer lots. The promotions haven't been repeated in October.

Incentive spending by automakers fell to $4,458 a vehicle through mid-October from $4,523 in September, according to CNW Marketing Research in Bandon, Oregon, which monitors incentives. General Motors reduced spending to $5,097 a vehicle from $5,168; Ford to $5,109 from $5,179; and DaimlerChrysler AG's Chrysler unit to $4,828 from $4,861, CNW said.

Among Asian automakers, Toyota's incentive spending declined through mid-October to $3,483 from $3,506 in September, CNW said.

Weakness Spotted

The Federal Reserve reported that auto sales were weak in several sections of the country in its survey of the 12 regional Fed Banks, known as the beige book for the color of its cover. The survey was conducted in the six weeks before Oct. 18.

The Philadelphia district said auto sales slowed in October following a strong September, and the Atlanta district said ``auto sales continued to disappoint'' in early October.

``District auto dealers indicated that light vehicles sales fell off in early October,'' the Chicago Fed bank reported.

``Strong September sales helped bring excessive inventories down to more desirable levels for many dealers,'' the Chicago report said. ``Most were cautiously optimistic about sales for the remainder of the year and were ordering light vehicles accordingly.''