Posted on: Friday, November 2, 2001
No-interest finance sparks auto sales
By Ed Garsten
Associated Press
DETROIT — Fueled by the lure of no-interest financing, General Motors Corp., Ford Motor Co. and Toyota Motors Sales Inc. saw October sales jump by nearly a third.
"Industrywide incentives in October seem to have helped offset the recent slide in consumer confidence," Jim Press, Toyota executive vice president and chief operating officer, said in a statement. The Japanese automaker saw its sales jump 28 percent to 164,084 last month compared with October 2000.
But the upswing in vehicle sales was not contained to automakers dangling interest-free financing in front of consumers.
American Honda recorded its best ever October, selling more than 105,000 vehicles — a 19 percent improvement over the same month a year ago — without offering no-interest financing.
A combination of factors drove the torrid sales pace, analysts said.
"First, it was the zero-percent financing, and second, Americans were not as shook up by the Sept. 11 events as the media, New York or Detroit made them out to be," said David Healy, an analyst with Burnham Securities. "Detroit overreacted and put too much cash on the hoof."
Jim Hall, vice president of industry market research firm AutoPacific, said consumers were opportunistic.
"One possible thing may be people are in the mode of `things might get worse, I can handle it now,'" Hall said.
GM reported it sold 546,093 vehicles last month, a 31 percent increase over the same month a year ago.
Truck sales for GM soared 47 percent setting an all-time monthly record for the automaker. GM passenger car sales increased 15.4 percent, led by strong sales of the Chevrolet Impala and Monte Carlo.
"`Wow' is the appropriate word," said Paul Ballew, GM's director of market analysis.
Ford sold 400,893 vehicles in October, 36 percent more than October, 2000.
Sales of Chrysler, Dodge and Jeep brand vehicles were up 5 percent, with just more than 209,000 units sold.
"We managed to improve sales volume by 22 percent over the prior month and limited the use of zero percent financing on both our 2001 and 2002 models," said Gary Dilts, Chrysler Group senior vice president of sales.
While sales of Chrysler Group passenger cars dipped 1.5 percent, sales of trucks jumped 7.2 percent.
The company's hottest vehicles, the Jeep Liberty and PT Cruiser, both set sales records last month, despite being left out of zero-percent finance programs.
Sales for the PT Cruiser were up 9 percent over October 2000.
The Jeep Liberty was not in production last year. About 16,000 were sold last month, the most since it became available last spring.
Sales of Ford passenger cars were up 40.5 percent, and light truck sales increased 34 percent over October 2000. Overall sales rose to 400,893 for the month.
The automaker said its F-Series pickup trucks achieved a record for any month, selling 102,424 units.
The Ford Focus also sold in record numbers for any month, and the Explorer sport utility vehicle had a record October, up 45.2 percent over last year.
"It was an extraordinary month made possible by an extraordinary offer," said Ford sales analyst George Pipas.
Ford, along with GM and the Chrysler Group, began offering no-interest financing in the days after the Sept. 11 terror attacks as a means of jump-starting sales, which were sluggish even before the attacks.
The offers were scheduled to expire Wednesday, but each of the three automakers decided they were so successful they would be extended until later this month.
While October was a blockbuster month for most automakers, most agreed the sales pace would cool once the incentives are removed or replaced by less generous offers.
They also said many people who might have bought vehicles later were pulled into the market early by the incentives, leaving a smaller pool of potential buyers for the first part of next year.
GM's Paul Ballew said he believed the incentives accounted for 400,000 to 500,000 additional vehicle sales industrywide in October.
Ford's Jaguar unit saw its U.S. sales jump 31 percent last month, while sales for its Volvo unit slipped 3.2 percent.
Sales of vehicles produced by Nissan Motors Corp. increased 8.8 percent last month compared with October 2000.
Swedish automaker Saab, a unit of GM, reported its third best month in history with record U.S. sales in October. Saab sold 4,820 vehicles in the United States last month, a 26 percent increase over sales during October 2000.
Powered by a 116 percent surge in sales for its Impreza line, U.S. sales for Japanese automaker Subaru jumped 12.4 percent last month.
Hyundai Motor America, the U.S. affiliate of the Korean automaker, saw its ninth straight record month in October, with an 85 percent rise in sales from October 2000.
U.S. sales dipped 2.3 percent last month for German automaker BMW, although sales of its X5 sport activity vehicle rose 3 percent compared with October 2000.
Sales figures are based on 27 sales days during October. There were 26 sales days during October 2000.
