Topic: Auto sales...and related stuff

[Mdxtasy]

We are in hickville remember?  This is the first driving one...not on a truck.

[Sir Osis of Liver]

I took out a Magnum SXT a few weeks ago for a relatively brief ride. Here are a few impressions.

Visibility isn’t great. Reminds me of looking out of my grandpa’s 1970 Newport: small windows, long hood, and a long way to the tiny back windows. I’m used to small Japanese cars with great visibility and found the interior quite claustrophobic.  

The interior was quite well done, with restrained styling, decent feel to the switchgear and plenty of people room front and rear. The one I tried had the leather interior and the seats were comfortable and I quite like the Mercedes seat adjustments. It did seem quite sombre however, and could do with lighter colours. As far as storage, the cargo area has several layers of “trays” of varying function. These do, however, eat up quite a bit of space. The load floor is quite high and but is still lower than the folded back seats (when the storage trays are removed). I doubt that the space in back is larger than the space in the cargo hold of a Mazda 6 wagon. Quite disappointing in such a large car.

The on road dynamics were quite good but a trace of the old school big car float could be felt, and the relatively high seating position accentuated the body roll. The car is exceptionally quiet on the road, better than anything else in its price range. The 3.5l, 250hp motor is adequate but no more than that. It is smooth and well isolated, with a bit of exhaust noise present on acceleration but quiet at cruise. The car’s weight was about 3900lbs, and the throttle linkage is very progressive, which accentuates the feeling of lethargy.

At $35000 with only a few options, the price is high for the performance and cargo capacity.  

[inco]

Not to worry Jeff - the Magnum will soon be made in the US only so you won't be seeing truckloads of them going there.

The R/T is still the package and at 4,100 pounds it might be a little porky, but add in the DOD motor and you are getting the same gas mileage as the 3.5 litre but twice the smiles per gallon when you launch it.  

It just looks cool - that slammed look without the loss of ride comfort as a result. I love the control I have with the Sat but the price you pay is ride harshness.  

Didn't notice that in the Magnum and the interior is, as BT said, - sombre, but to say that about a car from DC is actually a compliment compared to the old days. Sweet.

[Sir Osis of Liver]

Yeah, I think the styling is pretty great myself. I'm a bit disappointed it interferes with function however.

The local dealer didn’t have any R/T’s available. All headed to the States for now, at least that is what he told me! The RT starts at $37,000, which is pretty steep for me. Probably the one to have though.

[Snowman]

Kelley Blue Book picks the 2005 vehicles most likely to hold their value  

Most of the top 2005 model year vehicles expected to retain their value the best are luxury models, and two are from BMW and two are from Nissan.  
Kelley Blue Book, which tracks vehicle worth, said six vehicles from luxury brands and specifically the 2005 BMW 5-Series and the BMW-built MINI Cooper, as well as the Nissan 350Z and Nissan-built Infiniti G35 Coupe, are likely to have lower depreciation than the norm.  
Besides the BMW 5-Series and Infiniti G35 Coupe, the luxury brand vehicles are the Acura TL, Lexus GX 470, Mercedes-Benz CLK 320 Cabriolet and the Porsche Cayenne.  
Kelley noted all vehicles depreciate with time. Typically, a vehicle loses 65 percent of its value in its first five years. But some have a slower depreciation rate, and Kelley's top ten for 2005 are vehicles that are expected to depreciate only about 50 percent over five years.  
"The depreciation rate of a particular vehicle is dependent upon market conditions, supply and demand," said Charlie Vogelheim, executive editor of the Kelley Blue Book. "A highly popular or desirable car with limited availability will depreciate slower than a car that is in excess supply or less desirable."  
The Chevrolet Corvette, Mazda3 and Volkswagen GTI just missed making it onto the list, according to Kelley.  
Vehicles that don't hold their values well tend to be models with high production rates or those that don't have much market interest. Kelley cited the Pontiac Aztek, Chrysler Sebring sedan and Suzuki Vitara as examples.  
No matter what model it is, there are features that many car buyers today want to find in their vehicles, and cars that don't have them will suffer lower value down the road. These include power windows and door locks, tilt steering wheel and cruise control. Even attractive premium wheels will likely help a vehicle's resale value, Kelley said.

[Snowman]

Toyota aims for global domination

Barron's: No. 2 automaker eyes displacing GM by 2010
LOS ANGELES (CBS.MW) -- Toyota has its sights set on dominating the worldwide auto market, aiming to by match or better No. 1 General Motors' 15 percent share of the global market by 2010, according to the cover story in this week's Barron's.

The Japanese automaker which last year overtook Ford Motor as the second-largest producer of light vehicles, currently has a 10 percent share of the market. To reach its goal, Toyota would need to increase its sales by 50 percent, Barron's said.

It will make its biggest push in the U.S., Europe and China, according to the report.
So far this year, Toyota's U.S. sales growth is already sharply outpacing rivals.

Through Aug. 31, Toyota's U.S. sales rose 8.8 percent. In contrast, DaimlerChrysler posted a more modest rise of 1.7 percent. Sales at GM declined 1.8 percent through the first eight months, and Ford posted a 4.8 percent sales drop for the period.

Indeed, the No. 2 automaker sold more of its Camrys in the U.S. than all of the Dodge and Jeep vehicles combined sold by DaimlerChrysler. It also sold more high-end Lexus autos than all four of Ford's European luxury brands in total.
According to Barron's, each percentage point of U.S. market share is worth around $1 billion in profits.

In Europe, Toyota's sales were up 15 percent for the first half, pushing its share of that market up to 5.1 percent from 4.7 percent previously. According to the report, four of the six high-volume European automakers posted sales declines for the period.

Efficiency is one of Toyota's advantages, with its network of about 50 plants globally often running near 100 percent capacity, the report said.

The company comes in well ahead of its rivals in terms of profit for each vehicle it sells, according to the report. Toyota also benefits from the wide range of dependable vehicles it makes, it said.

Customer dissatisfaction with Toyota's dealer network, particularly in the U.S. but also in Europe, represents one area of potential weakness.

Toyota's U.S. dealers, which are often perceived as arrogant, rank near the bottom of customer satisfaction surveys for sales and service, Barron's said.

In order to reach its lofty goal of ousting GM from its top spot, Toyota will need to entice new customers, partly by improving the experience its customers receive at dealerships, according to the report.

U.S.-listed shares of Toyota have gained over 12 percent so far this year. On Friday, they dipped 4 cents to $77.19.

[barrie1]

Only Time will Tell if this prodiction comes true. If Toyota's Dealers don't smarten up then they will not even get close.

[Snowman]

BusinessWeek Online

China: Letting Up On The Gas
Monday September 13, 8:07 am ET  
When Li Chen took a job selling cars at the Kailong Pacific Buick dealership in Shanghai six months ago, work was a snap. Demand was so strong that people were willing to slap down $40,000 in advance to get quick delivery of a Buick Regal sedan, and a hotshot salesman could close a deal in 30 minutes flat. These days, however, every sale is a tough slog. "More customers are looking instead of buying," says Li.
Li isn't the only one singing the showroom blues. Dealerships from Shenzhen to Shenyang have been struggling to move cars in a market that has seen monthly sales decline steadily since hitting an all-time peak in March. Year-on-year, sales grew just 6.8% in June and 2.5% in July -- and August figures seem likely to come in even weaker. That's a dramatic reversal from last year, when auto sales surged 76%, to 2.1 million cars, on top of 62% growth in 2002. "It has been a pretty ugly picture," says Philip F. Murtaugh, chairman of General Motors China Group. Although GM has fared relatively well -- its sales were up 56% in the first half -- the summer months have fallen short of expectations. GM's inventories have been edging up, and the company in August cut production at its Shanghai plant to five days a week from six days. "We absolutely expected that growth would slow, but that it happened so quickly took people by surprise," Murtaugh says.  
Why the downshift? Blame China's efforts to rein in its overheated economy. Although the auto sector hasn't been specifically targeted, the government's bid to restrict credit growth of all kinds has hit car buyers especially hard. Today just 10% of car purchases are financed with loans, down from 35% a year ago, says Automotive Resources Asia Ltd., a Beijing consultancy. "The current loan policy is too strict," grouses Zhang Yifei, a Ford salesman at Shanghai Jiahua Motor. Manufacturers say automobile dealers are also trimming inventory because banks are denying them loans they need for working capital. And government agencies and state-owned companies, which account for about 40% of auto sales, have cut back on purchases voluntarily in support of government measures to dampen investment.  
Ambitious Plans
The abrupt slowdown has come as a serious shock for foreign carmakers, who have been pinning their hopes for global growth on China. In the past year, top auto executives from Europe, the U.S., and Japan have flocked to the mainland to announce ambitious expansion plans. GM wants to spend $3 billion by 2007 to double its production capacity in China, to 1.3 million cars and trucks, and it expects to introduce 20 new models over that time. Volkswagen is stumping up $6.3 billion to double capacity to 1.6 million vehicles by 2008. Relative newcomer Ford Motor Co. (F) plans to invest $1 billion on expansion in China, including a new plant in Nanjing, while Toyota Motor Corp. (TM) has earmarked $730 million to build Camrys in a new factory in Guangzhou and to expand capacity at its Tianjin plant by 74%. Together, nine big international manufacturers plan to spend a total of $9.7 billion in China between 2003 and 2007, doubling the country's production capacity to 5 million passenger cars annually, according to consultancy A.T. Kearney Inc. (EDS)  
One of the most severely hit by the slowdown has been Volkswagen, the country's largest carmaker, with 30% of the market. VW's Shanghai plant saw year-on-year sales drop 18.9% in August, to just 26,000 cars, according to press reports. Sluggish demand spurred VW to dial back its sales forecast for this year. Initially, the company expected to sell 830,000 Passats, Golfs, Audis, and other vehicles. Today VW says it might sell as few as 700,000, compared with 697,000 last year. That means VW probably won't match the $680 million profit it earned in China in 2003. To shore up its bottom line, the group has announced plans to cut Chinese costs by $480 million by the end of 2005, though VW declined to provide details.  
It's not just the multinationals that are suffering. Hangzhou's Geely Group Co., China's largest private auto maker with no foreign ties, predicted early this year it would double its sales, to 160,000 cars, in 2004. "Given the current market weakness, that's unrealistic," says spokesman Zhong Xiaodong. The company today is shooting for 120,000.  
To keep the metal moving, auto makers have cut their prices. In May, GM slashed nearly $5,000 from the sticker price of its midsize Buick Regal sedan, to $35,900, and lopped $3,500 off its most expensive GL8 executive wagon, to $42,000. Volkswagen followed suit in June, cutting prices on seven models by as much as 11%. On Sept. 6, Hyundai announced across-the-board price cuts of 10%. Now its entry-level Elantra sedan starts at just $13,600 and its midsize Sonata ranges from $18,100 to $27,700. Toyota is offering $600 cash rebates on its Corolla and VIOS models.  
Those cuts have had an unintended effect. Although sales of discounted cars typically jump, the overall market has been hurt as many customers wait for even deeper discounts. "Buyers are just sitting on the sidelines," laments GM's Murtaugh. Lindsae Li, for instance, has been shopping for a family car so she can drive her 12-year-old daughter to school, a long taxi ride from their home. For three months, Li has been prowling showrooms but still plans to hold off for another month. Time to buy? No way. "Prices are falling, and there's room for more cuts," she says.  
Meanwhile, carmakers are looking for ways to save money. Manufacturers "come to us very frequently asking for price reductions," says Chen Jinya, president of parts maker Delphi Automotive Systems. So far, though, parts makers haven't been badly hurt, since the auto manufacturers have yet to really slam the brakes on production.  
Others are trying to skirt the banks and offer automotive loans on their own. In August, GM's finance subsidiary, General Motors Acceptance Corp. launched China's first dedicated auto-loan venture in conjunction with Shanghai Automotive Industry Corp, its manufacturing partner. VW in September began offering financing through its dealerships in Beijing, while Ford and Daimler Chrysler are planning similar schemes to help widen the customer pool.  
It's too soon to tell whether the slowdown represents deeper problems that could force auto makers to reconsider their plans for China. The last time sales slumped, in early 2000, the market roared back after just three months. This time, though, there's far more capacity -- and the government's push to rein in economic growth has just started. Still, executives and analysts insist that while the market is going through a tough period, there's no reason to doubt China's potential. "It's just a bump in the road," says Yale Zhang, director for emerging markets at consultancy CSM Worldwide. In China, though, the potholes can be very deep.

[Mdxtasy]

http://autonet.ca/AutonetStories/Stories.cfm?StoryID=12913

[Giant Dwarf]

That reminds me of when I was about 16 or 17 and had borrowed my dad's shiny, black Mazda B2600 sport truck for an evening.  I backed very slowly into an old Honda Civic.  Mortified, I jumped out, looked at the Civic and saw that not even the signal light plastic had been cracked and yet the chrome bumper on the back of the truck looked like crumpled aluminum foil.  What a pile of crap.  Clearly the truck's bumpers were there more to act as a step and for cosmetic purposes than any sort of protection to the truck.

[Snowman]

Keeping Boomers Behind the Wheel
http://yahoo.businessweek.com/technology/content/sep2004/tc20040914_9190_tc178.htm
 

[Snowman]

Ford Announces Details of Jaguar Improvement Actions; Increases Earnings Guidance for 2004
Friday September 17, 7:00 am ET  
DEARBORN, Mich., Sept. 17 /PRNewswire-FirstCall/ -- Ford Motor Company and its Jaguar Cars unit announced today improvement actions for Jaguar and, separately, an increase in its third-quarter and full-year financial guidance for 2004.  
Jaguar Actions:  
In a separate release issued earlier today, Jaguar Cars announced a series of actions aimed at improving its business fundamentals. (See the Jaguar Cars release, dated September 17, 2004, for complete details.) The actions included:  
•   Cessation of final assembly operations at the Browns Lane plant by year-end 2005; these operations will be consolidated into Jaguar's Castle Bromwich plant.  
•   Total personnel reductions of approximately 1,150, including those related to the consolidation of assembly operations.  
•   A reduction of 15,000 units in Jaguar's remaining production plan for 2004.  
•   Ford's exit from Formula One racing activities, including the sale of those operations.  
The personnel reductions and the Formula One decision together are estimated to result in a charge to pre-tax income of approximately $450 million. Of this, it is expected that approximately $375 million of these charges are to occur this year, with the remainder occurring next year. Together with previously announced 2004 special items, these actions are expected to reduce full-year 2004 earnings by about 25 cents per share.  
2004 Earnings Outlook  
Separately, the company announced it is raising its third-quarter earnings guidance by 10 cents per share, from a range of breakeven to 5 cents per share to a range of 10 to 15 cents per share, in each case from continuing operations, excluding special items.  
As a result, full-year earnings now are expected to be in the range of $1.90 to $2.00 per share, compared with previous guidance of $1.80 to $1.90 per share, in each case from continuing operations, excluding special items. The improvement primarily reflects continued strong performance in Financial Services and improved cost performance in the Automotive Sector, partially offset by lower production at Jaguar.  
The Company will host a conference to discuss these developments beginning at 8.30 a.m. EDT today, with Don Leclair, Chief Financial Officer; Mark Fields, Executive Vice President, Premier Automotive Group and Ford of Europe; and Joe Greenwell, Chairman and CEO of Jaguar and Land Rover. Participants can access the call by dialing 800-237-9752. (International dial-in number is 617-847-8706.) The pass code for both numbers is a verbal response of "Ford Business Update." A listen-only web cast also will be available on the Internet at http://www.shareholder.ford.com . Supporting presentation materials will be available shortly before the call begins at the same web site address. Teleconference participants will have an opportunity to ask questions following the presentation.  
Replays of the call will be available through Friday, September 24, by dialing 888-286-8010 with passcode 95842917. The international access number for the replay is 617-801-6888 with the same passcode. Replays will also be available at http://www.shareholder.ford.com . Go to http://media.ford.com for news releases and high-resolution photographs.  
Statements included herein may constitute "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:  
•   greater price competition resulting from currency fluctuations, industry overcapacity or other factors;  
•   a significant decline in industry sales, particularly in the U.S. or Europe, resulting from slowing economic growth, geo-political events or other factors;  
•   lower-than-anticipated market acceptance of new or existing products;  
•   work stoppages at key Ford or supplier facilities or other interruptions of supplies;  
•   the discovery of defects in vehicles resulting in delays in new model launches, recall campaigns or increased warranty costs;  
•   increased safety, emissions, fuel economy or other regulation resulting in higher costs and/or sales restrictions;  
•   unusual or significant litigation or governmental investigations arising out of alleged defects in our products or otherwise;  
•   worse-than-assumed economic and demographic experience for our post- retirement benefit plans (e.g., investment returns, interest rates, health care cost trends, benefit improvements);  
•   currency or commodity price fluctuations;  
•   changes in interest rates;  
•   a market shift from truck sales in the U.S.;  
•   economic difficulties in any significant market;  
•   reduced availability of or higher prices for fuel;  
•   labor or other constraints on our ability to restructure our business;  
•   a change in our requirements under long-term supply arrangements under which we are obligated to purchase minimum quantities or pay minimum amounts;  
•   credit rating downgrades;  
•   inability to access debt or securitization markets around the world at competitive rates or in sufficient amounts;  
•   higher-than-expected credit losses;  
•   lower-than-anticipated residual values for leased vehicles;  
•   increased price competition in the rental car industry and/or a general decline in business or leisure travel due to terrorist attacks, acts of war, epidemic diseases or measures taken by governments in response thereto that negatively affect the travel industry; and  
•   our inability to implement the Revitalization Plan

[Mdxtasy]

What's new for 2005?

http://www.caranddriver.com/article.asp?section_id=36&article_id=8567

[Snowman]

Backseat Driver  
Inventories: Too Much Of A Good Thing
Jerry Flint, 09.21.04, 12:01 AM ET
 
Automotive News reports that as of Sept. 1, U.S. inventories of passenger cars and light trucks climbed to 3.7 million units. That compares with 3.3 million vehicles a year ago, which means that 400,000 additional cars and trucks are sitting around in dealers' lots and showrooms. I think the auto industry is courting disaster.

One day manufacturers will be caught with those huge inventories--when business slumps or the cars won't move no matter what the incentives. If it happens this fall then the 2005 model year will turn into a catastrophe because the dealers will spend all their time getting rid of the old stuff and the new models will die on the lot.

If it happens at the start of the new calendar year then there will be massive plant shutdowns this coming winter--January and February--which will sink the economy. I've seen these things happen.  

Detroit's inventories have been growing for several years because the domestic manufacturers like to run their factories full even if they aren't retailing cars as fast as they can make them. In recent years the problem has been solved by December "blowout" sales. Lots of retailers use this word, but when a car company has a genuine blowout it means a monster sale--big rebates for customers, and big incentives for dealers and sales people. Companies will do almost anything to get those old cars off the lots.  

Yes, the domestics are cutting back some production, but not much so far. Sales in September and October will tell the story. Even if Detroit gets by this year, the industry is on a dangerous road.  

Those bloated inventories are a symptom of the problem: The U.S. manufacturers are continually losing ground to foreign nameplates but don't want to shut plants to match their lower market share.  

The conventional wisdom in the U.S. auto industry is that it is better to keep the plants open--and hope to hold onto market share--than it is to shut down a facility. High-seniority workers, which are in abundance in older U.S. auto factories, keep collecting pay and medical benefits even when permanently laid off. That is, until they become old enough to qualify for their pensions.  

The current arrangement is particularly tough for General Motors. Thus it overproduces and then tries to push the sales with ever-growing incentives. GM is hoping that an ever-growing market will cover the problem until their cars and trucks get so much better that customers take more of them without so much cash on the table. But these days, the only thing that is growing for GM is inventories.

GM's strategy has worked so far, but it's no way to run a business. And the incentives have reached such a point that it's hard to believe that they can go much higher, Just look at some of the incentive numbers, furnished by Edmunds.com, an authority on the industry. In the latest month the average sticker on a Cadillac DeVille was $54,193 but the net price was $42,211, a 22% difference. This means that the factory gives up that much in potential profit through rebates, dealer cash, or lease or interest rate subsidies. And buyers usually get additional discounts from the dealer.

A Ford Motor's Explorer sticker averaged $33,881 but the net price was $25,745, a 24% difference, or $5,378 in various factory incentives. Those SUVs get harder to sell.  
How do you get out of that? By building cars that, in the words of GM Vice Chairman Robert A. "Bob" Lutz, customers "gotta have." Chrysler's new 300 seems to be one of those models. A typical sticker for the Chrysler 300 last month was $32,345 versus a net price of $30,574. So Chrysler's factor incentive was only 5%, or $1,219. And that deal expired.

In this market even the top-tier Japanese manufacturers are cutting their prices, but not as much. A Honda Accord has an average sticker $24,186 and a net of $21,589, or an 11% giveback worth $707 in factory incentives, says Edmunds.  
The industry likes to count its stockpile in "days supply," which measures the inventory for a model divided by the daily selling rate in the past month.  

You get some amazing figures when you look at these supply figures: 316 days worth for the Chevy SSR, a $40,000-plus sports truck, which dealers hold for top dollar; 387 days for the Saab 9-2X (just put on sale); and 212 days for the Chrysler Crossfire. And at the other end there's the Mini Cooper (owned by BMW), with an 8-day supply--700 cars in inventory--because everybody loves the Mini and they aren't overproduced.
 
General Motors has 72 days of inventory as of Sept. 1; Ford, 76 days and Chrysler (without Mercedes-Benz), 74 days. The conventional wisdom is that a 60-day supply is fine. Personally, I've always thought that 60 days is too high. Toyota Motor (nyse: TM - news - people ) is doing great with 32 days. Honda has 34 days.  
What Detroit needs--and fast--are cars and trucks that are better in every way: looks, performance, handling, quality and fuel economy. In addition, it is time that capacity is brought into line with demand. This means closing more factories.

This post is made with 100% recycled electrons.

[Giant Dwarf]

387 days for the Saab 9-2X?  People whined about the 9-2 being too expensive:  "Why would anyone spend extra for that over the Subaru?".  Well, if the incentives start piling on, plus the fin. / lease rates come waaay down (all typical of Saab), then they're going to work out to be a stellar deal.  This will be especially true with the Aero with its sexy 17" wheels and 'better' suspension tuning than the WRX.

[Drivesideways]

Wow!  Eight day supply for the Mini?  That's incredible.  I'm not surprised Toyota is the lowest of the large volume producers.  I don't know their labour flexibility situation, but I know their production philosphy is to reduce lead times and batch sizes so they don't overproduce.  Nobody else does this as well as Toyota.  Honda looks close, though.

Great post, Snowy.  Good find.

(Message edited by drivesideways on September 21, 2004)

[wing]

I wonder what the supply is on something like a cavalier.

I need 100's of those on lots, '04's and the '05's are coming as well as the cobalt it's going to be madness!

If I can walk out of a showroom with a car for under $8000 I have to really think about buying that car!

[Snowman]

Dark clouds on the horizon…..The swelling inventories cannot continue to escalate. The 2005 model year is upon us and nothing is moving. A big adjustment is need by Detroit to deal with the stockpile. A drastic move would be to sell below cost for a period….This would hurt the new vehicle sales but they should throttle back production for a few months. The competition would suffer also as the price gap would make it feasible to buy the lower rated products.  

This post is made with 100% recycled electrons.

[Snowman]

On that note:

Associated Press
GM Plans Sales Blitz on 2004 Models
Tuesday September 21, 3:03 pm ET  
By John Porretto, AP Auto Writer  

GM Plans Sales Blitz to Clear Out 2004 Models to Help Unload Backlog of Inventory
 
DETROIT (AP) -- In true retail fashion, General Motors Corp. is planning what it hopes will be a clearance sale next week on 2004 models, offering zero-percent financing for 72 months to help unload a backlog of inventory.

Industry observers, however, say the blitz could hurt sales in the coming months and beyond.  
GM spokeswoman Deborah Silverman said the company had no comment on such a promotion, but dealers say they were notified in recent days of the program, which applies to brands such as Chevrolet, Pontiac, Buick and GMC. The dates are Sept. 28-30.  

"I'm really excited about it," said Chris Carrubba, general manager of Jim Robinson Chevrolet-Cadillac in Pascagoula, Miss. "I think it's going to spark interest and help us move out some inventory."  

Other brands, including Chrysler and Isuzu, have offered no-interest loans for 72 months. Analysts say GM is clearly anxious about the above-average number of 2004 models sitting on lots and the need to make room for new 2005 models on the way.
 
GM, the world's largest automaker, is counting on new entries such as the 2005 Chevrolet Cobalt premium small car and Pontiac G6 midsize sedan to propel business in the final months of 2004.  
For the first eight months of the year, GM's U.S. sales were off 1.6 percent from a year ago. After a third straight month of negative sales growth in August, GM earlier this month added $500 to $1,000 in cash on most 2005 model year vehicles already available.  

GM spent an average of $4,379 per vehicle on incentives in August -- the most of any major automaker.  

"Their backs are against the wall to an extent. They have to do this to keep inventory moving," said Mike Wall, an industry analyst with CSM Worldwide in Grand Rapids. "The question is, once this is over, what's next? Are consumers going to expect these kinds of incentives on '05 models? My answer is: probably, or pretty close to it."  

Bob Schnorbus, chief economist for J.D. Power and Associates, said next week's promotion will almost certainly "pull ahead" sales that may have occurred in the coming months. It also places some people in a car or truck they may drive for the next six years.
 
"For whatever reason, consumers right now just aren't in a buying mood, and it's taking more and more to pull them into dealerships," Schnorbus said. "This is going to do that. But are you going to get beyond the people who were already in the market?"
 
GM and Ford Motor Co. both reported disappointing U.S. sales for August, prompting them to cut planned vehicle production in the fourth quarter, which could hurt profits. Toyota Motor Corp. and Honda Motor Co., the top two Japanese automakers, also reported sluggish sales, which analysts and industry executives attributed in part to Hurricane Charley in Florida, high energy prices and declining consumer confidence.  

In a new industry report card, Standard & Poor's says its "discomfort with GM's performance has grown in the course of this year."
 
"U.S. market share has eroded significantly ... despite the introduction of major new products, a heightened emphasis on low-margin sales to daily rental companies and continuing aggressive discounting," the S&P report said.
 
On a positive note, S&P said earnings at GM's finance arm continue to exceed expectations, and that GM's overall liquidity and funding flexibility remain satisfactory.
 
In afternoon trading on the New York Stock Exchange, GM shares were up 5 cents to $41.89. In the past year, GM shares have traded as low as $40.01 and as high as $55.55. The company has not wavered from its 2004 earnings estimate of approximately $7 a share. Wall Street's current estimate is $7.06.




This post is made with 100% recycled electrons.


(Message edited by snowman on September 21, 2004)

[Giant Dwarf]

I saw a never-yet-sold '04 (or was it an '03?) Corvette at the local GM dealer this week with $10,000 off across the windshield.  

$10k off Vettes, and $8k off 9-5s... there are some good GM products out there.  If they just put a $25k discount on the CTS-V I might be interested, ha ha.