Detroit Big Three Benefiting From Discounts in July

Detroit July 20, 2005; Dee-Ann Durbin writing for the AP reported that discount programs that let consumers pay the employee price for new vehicles are paying off for the Big Three U.S. automakers so far this month, according to sales estimates released Thursday.

General Motors Corp. introduced the deals in June and saw sales jump 41 percent that month. Ford Motor Co. and DaimlerChrysler AG followed with their own deals in July. The promotions run through Aug. 1.

Ford and DaimlerChrysler are seeing increased sales this month and appear to have taken some of the wind from GM's sails, according to the Power Information Network, an affiliate of auto industry analyst J.D. Power and Associates. But GM also is getting a hefty boost.

Through the first 15 days of July, Detroit-based GM captured 30.3 percent of the new-vehicle market, compared with 25 percent a year ago and 33.4 percent during the first 15 days of June, according to the Power Information Network. Sales were up 42 percent over last July.

Dearborn, Mich.-based Ford's share of the market rebounded to 19.6 percent through the first 15 days of the month, up from 15.1 percent in June and 18.1 percent in July 2004. Ford sales were up 27 percent over last July.

DaimlerChrysler grabbed 12.5 percent of the market through the first 15 days of July, up from 11.3 percent in June but down from 13.3 percent a year ago. DaimlerChrysler sales were up 11 percent over last July.

Alan Helfman, manager of River Oaks Chrysler Jeep in Houston, said he thinks his sales will be up 10 percent in July, even though some hot cars like the Chrysler 300C sedan aren't included in the discount. Helfman hopes sales increase because the discounts are eating into his profits.

"I'm not bragging yet but it could turn out to be a good month," Helfman said. "The customers are shopping harder and harder, so it's making it tough to make any kind of gross. It's going to take its toll unless we get to a certain level of sales."

It remains to be seen whether the Big Three can continue the sales gains once the discounts end and 2006 vehicles appear on dealer lots. Several analysts have predicted that the discount plans are simply pulling forward the kinds of sales dealers usually see when they try to clear their lots at the end of the year.

The Power Information Network said Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. all have lost market share in July compared with last month and July 2004. Toyota Motor has a 12.6 percent market share, Honda a 8.4 percent share and Nissan a 6.1 percent share. But all three Japanese automakers are expected to see double-digit sales increases in July.

"The domestic programs are expanding the overall market, which is lowering the Japanese companies' shares," said Tom Libby, senior director of industry analysis at the Power Information Network. "But the Japanese are not selling any fewer vehicles than in the past; they are selling more vehicles than in both June and last July."

The initial sales figures are good news for Ford and GM, which announced substantial second-quarter losses in North America this week.