With sales fueled by increased incentives including no-interest financing and cash-back offers, major U.S. automakers reported yesterday that sales shot up for the month of December but that they were down for the year.
General Motors Corp. turned in the strongest performance with a 36 percent increase in vehicle sales last month, compared with December 2001 sales figures.
"General Motors went after sales and they captured them," said Paul Taylor, an economist for the National Automobile Dealers Association. But even with a strong finish, GM reported that sales for the year were down 1 percent from 2001.
Overall, vehicle sales are expected to be down for the year, totaling about 16.8 million units, compared with 17.2 million in 2001.
Ford Motor Co. sales were up 8.2 percent for December, but off by 8.8 percent for the year. Sales at the Chrysler unit of Germany-based DaimlerChrysler AG were up 0.8 percent in December but down 3 percent for 2002.
Meanwhile Toyota Motor Corp.'s sales increased by 2 percent last month and were up 0.9 percent overall for the year.
The December gains followed a couple of months of slow sales as consumers bided their time waiting for automakers to enhance the incentives that have become almost routine by now. "While it was a great month, it was an incentive-driven sales increase," said Jeff Schuster, director of North American forecasting for J.D. Power and Associates. "Consumers are willing to play the waiting game now."
That meant consumers held back even when manufacturers were offering interest-free financing for three years or cash rebates to buyers. Many of those who waited were able to arrange no-interest financing for five years. And, in the case of GM, the company also threw in a small cash sweetener on some vehicles, Schuster said.
Although some manufacturers may try to reduce incentives on some of their better-selling models during the year ahead, no one expects to see the end of incentives. GM, for example, cut incentives for some models yesterday but offered a new round of rebates on others.
Because of the continuing battle for market share -- or to prevent the erosion of market share -- the incentives are likely to continue, analysts said. And even though many buyers have bought a car within the past several years, consumption may continue at high levels, said Taylor of the dealers association. Consumers may be getting accustomed to buying cars more frequently than before, he said.
At 16.8 million units, 2002 would be the fourth-best year on record for vehicle sales.
The all-time best performance was in 2000, when 17.35 million vehicles were sold. In 1999, the number was 16.9 million, which beat the previous record of 16 million in 1986. "When you put the four years together, it's an extraordinary performance," Taylor said.