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U.S. car sales down 1.4% in June

But imports gain market share to keep pace with ’99

SHARE U.S. car sales down 1.4% in June

U.S. sales of cars and light trucks fell an estimated 1.4 percent in June, the second straight monthly decline as buyers spurned some General Motors Corp. and DaimlerChrysler AG vehicles and consumers stepped back from the year's earlier buying spree.

Sales declined 5.2 percent at General Motors and 5.9 percent at DaimlerChrysler's Chrysler arm, based on five analysts' average forecasts for Monday's sales reports. Ford Motor Co. sales fell about 2.3 percent from June 1999, its best month ever at the time.

Major Japanese and European rivals continued to make sales gains and win market share, aided by fresh products such as Nissan Motor Co.'s Xterra sport-utility vehicle. Their success has helped the industry remain on track to beat last year's first-half record of 8.54 million light vehicles, even as rising interest rates and consumer debt begin to give some buyers pause.

"The pace of light vehicle sales has moderated ever since the searing 19.2 million unit annual pace reached in February," said Paul Taylor, chief economist for the National Auto Dealers Association. "So the slowdown so far is just back to the record pace set in 1999."

June's new vehicle monthly selling rate is forecast at 17 million vehicles, matching the year-earlier month. Until 1999, when actual sales were a record 16.96 million vehicles, annual sales of 15 million were generally considered strong.

Consumer confidence fell in June from a record high in May, dampened by higher gasoline prices and the Federal Reserve's six interest rate increases in a year. Consumers also are shouldering more debt, with consumer borrowing rising a more-than-expected $9.3 billion in April.

Those factors have combined to cool consumer spending, and "the automakers with the weakest lineups are seeing it first," said George Magliano, an analyst with the WEFA Group in New York.

GM's main problem is low demand for its cars, particularly at its Oldsmobile and Buick divisions, while its new Saturn L-series midsize car hasn't met sales expectations, analysts said. Ford faces tough comparisons and it also is phasing out its Mercury Mystique and Ford Contour cars to build a new sport utility. DaimlerChrysler has an aging light-truck lineup, analysts said.

Discounts and other incentives reached record levels during the first two weeks of June, according to Art Spinella, an analyst with CNW Marketing Research. At the same time, the gap has narrowed between incentives on cars and light trucks. In May, industrywide light-truck incentives increased 9 percent to an average of $1,744, while car discounts rose 3.4 percent to $1,747 — just $3 more than for trucks, according to Autodata Corp.

DaimlerChrysler's Chrysler, Dodge and Jeep brands in May posted their biggest sales decline in three years. The automaker responded with a new round of discounts, doubling the Dodge Ram pickup's rebate to $2,000 and raising cash back on its longer minivans by $250 to $2,000. The Dodge Durango sport-utility vehicle, which until now had no price break, has a $1,000 rebate.

Analysts expect Stuttgart, Germany-based DaimlerChrysler's sales to decline until it gets its PT Cruiser small car/truck hybrid in dealerships in significant numbers, followed by redesigned minivan and midsize car lineups in the third quarter.

"Chrysler is in the late stages of a run-out on several models, including the key minivan, and its market share is suffering accordingly," said David Healy, an analyst with Burnham Securities.