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Good deals spurred 2001 auto sales

Analysts’ views more pessimistic for the new year

SHARE Good deals spurred 2001 auto sales

DETROIT — Auto companies, propelled by low-cost financing plans, finished the year with sales just slightly below a record set in 2000, according to data released on Thursday. But expectations for 2002 are pessimistic, due to the economy as well as the dent that the incentives likely have made in demand.

Carmakers ended 2001 with sales of about 17.2 million vehicles, down slightly from the record 17.4 million in sales a year earlier. Few analysts expected such a strong performance last summer, when industry sales were lagging, and the Sept. 11 terrorist attacks all but halted showroom traffic.

But buyers came back in droves when the automakers, led by General Motors, introduced interest-free financing on many of their vehicles. Without the loan deals, industry officials estimated that the industry's selling pace for the fourth quarter would have been a tepid 15 million vehicles, on a seasonally adjusted annual basis.

Instead, the deals triggered double-digit sales increases during the fall — but at a cost, to both the companies' pocketbooks and, most likely, to their 2002 results.

Each loan cost the auto companies about $2,300 in lost interest payments. Moreover, analysts and executives estimate that about 500,000 sales were cannibalized from 2002, as people bought vehicles sooner than they had planned. If the economy recovers quickly, forecasters expect sales of about 15.9 million cars and trucks this year. If it remains sluggish, expectations fall to about 15 million vehicles, a level not seen since 1996.

"That's a million units gone.

Vaporized," said James Hall, auto industry analyst with AutoPacific Inc. in Southfield, Mich.

Some auto executives believe sales will be higher, even if their own economists do not agree. General Motors is forecasting industry sales of 15 million to 15.5 million, but William J. Lovejoy, GM's group vice president of North American sales, service and marketing, rejects that sober projection.

"I'm optimistic," he said on Thursday. "I think it will be stronger."

Indeed, Lovejoy was glowing as GM claimed its first increase in overall market share since 1988, even though GM, Ford and Chrysler all reported a sales decline for 2001.

According to Ward's Automotive Reports, GM wound up with 28.34 percent of car and light truck sales, a tiny increase of about 0.03 percent. That still was well below the 30 percent share that has long been the company's target.

GM's market share peaked in 1960 at 60 percent, and the company — trying to take advantage of financial problems at Ford and Chrysler — has focused lately on regaining share, even at the expense of profits.

GM, which led the industry into the fall's round of loan incentives and persisted as its rivals cried foul over the cost, introduced a new incentive program on Thursday to replace its interest-free loan plan, which expired on Wednesday.

Under the new program, GM is offering rebates of $2,002 on most models. Unlike the loan program, which was available only to the best credit risks — and only to buyers who financed their purchases — the new plan offers discounts to customers who lease vehicles and who pay cash. The rebates can also be coupled with discounted loans.

The plan is intended to maintain GM's sales momentum, Lovejoy said. Indeed, there were signs in December that the interest-free loans were losing their initial appeal. GM, Ford and Chrysler reported only single-digit sales increases last month, versus jumps of 30 percent and more in October and November, when the loans were still a novelty.

Officials at Ford and Chrysler, which will continue to offer interest-free financing plans into January, said they would study the new GM program. James G. O'Connor, president of the Ford division, termed the plan "rich." Even so, the $2,002 rebates are less than the average cost of the interest-free loans that GM had offered and smaller than discounts of $2,500 that the company already had been offering on some vehicles.

The new deals are also far smaller than rebates of up to $5,000 per car that auto companies have routinely touted over the years during end-of-the-season inventory clearance promotions.

Along with its market share increase, GM was claiming the crown as the industry's truck sales leader. GM was slow to spot the shift of buyers to pickups, sport utilities and minivans in the 1990s, but it recently has launched a new series of SUVs that helped propel industry truck sales past those of cars in 2001 for the first time. In December, 68 percent of GM's sales were of light trucks, according to Lovejoy; for the year, the figure was about 58 percent of sales.

Ford's F-series pickup remained the industry's best-selling vehicle for the 25th consecutive year. Ford said it sold more than 911,000 F-series trucks, the first time since 1972 that a single vehicle nameplate had topped the 900,000 mark. Chevrolet's big sedans, the Bel Air, Caprice and Impala, were the last to achieve such high sales volume. Back then, GM counted the trio as a single nameplate for sales purposes.

However, the truck sales boom could not boost Detroit's traditional Big Three companies to overall sales increases for the year. GM's sales fell 1.1 percent, Ford was off 5.5 percent and Chrysler sales dropped 10 percent.

The story was different for several foreign-based auto companies, a number of which set U.S. sales records in 2001 without having to offer widespread discounting.

Audi, Volvo and BMW all set sales records, as did Toyota, with sales up 7.9 percent.

Though analysts expect that Toyota could eventually surpass Chrysler to become the third-biggest company in the U.S. market, Toyota ended 2001 about 400,000 vehicles behind Chrysler, with sales of 1.7 million cars and trucks. Toyota's Lexus brand remained the best-selling luxury company for the second year in a row.

But the Toyota Camry lost the best-selling car title to the Honda Accord, which last held that crown a decade ago. Honda, which sold just over 411,000 Accords, said its U.S. sales for the year rose 4.2 percent, to just over 1.2 million.

Nissan, in the midst of a corporate overhaul under the guidance of Carlos Ghosn, the Renault executive dispatched to run the Japanese carmaker, said its sales for the year dropped 6.5 percent, though sales were stronger in December, thanks in part to the refurbished Altima sedan.

South Korean automakers, which focus on lower-priced vehicles, posted their best year ever in the United States. Hyundai, Kia and Daewoo sold a collective 618,000 vehicles, the first time the trio had crossed the 600,000 mark.