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The Honolulu Advertiser
Posted on: Friday, January 4, 2002

Auto sales soar with no-interest financing

By Earle Eldridge
USA Today

Big cash rebates and cheap loan deals made 2001 the second-best auto sales year in history.

And General Motors' announcement yesterday of a fresh round of rebates makes it likely the incentive war will continue.

Automakers sold 17.2 million cars and trucks last year, compared with 17.4 million in 2000.

But without incentives, especially no-interest financing offered after the Sept. 11 attacks, the story likely would have been different. Sales probably would have been just 15 million, says Jim O'Conner at Ford.

In Hawai'i, car sales last year differed little from those in the previous year. Through October 2001, 47,609 new cars were registered in Hawai'i, compared with 47,868 through the same period in 2000, according to David Rolf, executive director of the Hawaii Automobile Dealers Association.

"We're only off by half a tick," he said, adding that there is hope those numbers might rise as registrations from earlier purchases trickle in.

Rolf said he expects results from November and December to be available within a month. Last year local dealers sold 52,456 cars; in 1999, they sold 45,054.

Rolf said the dealers he talked to indicated that sales remained strong through the last two months of the year, despite a slumping economy. Many of the buying late in the year continued to be motivated by zero-percent financing offers.

"There's an awful lot of shopping going on," he said.

If the numbers remain steady, 2001 would be the third-highest year in the past 10 for Hawai'i auto dealers.

Highlights from the December and yearend sales reports:

• For the first time, trucks — pickups, sport utility vehicles and minivans — outsold cars, taking 50.9 percent of the market, according to Autodata.

• GM sales were up 7 percent in December from a year ago but down 1 percent for the year. GM says the 2.6 million trucks it sold last year was best ever for any

automaker. But GM's car sales were down 19 percent in December, 10 percent for the year.

• Ford's sales were flat in December from a year ago but off 6 percent for the year. Car sales nose-dived 25 percent in December. But the F-Series pickup retained its title as the best-selling vehicle in the United States, now a 20-year record.

• DaimlerChrysler sales jumped 5.6 percent in December but fell 9.1 percent for the year. Chrysler began a seven-year/100,000-mile warranty program that has helped sales. But its market share fell to 14.4 percent in 2001 from 15.7 percent, largely because of poor sales of its big cars.

• Honda set a sales record for the year, and its Accord replaced Toyota Camry as best-selling car.

• Toyota set an annual sales record, and its upscale Lexus line was best-selling luxury brand.

• BMW set a sales record for the year and replaced Mercedes-Benz as the No. 2 luxury brand.

• Korean automaker Hyundai has captured the entry-level market; annual sales are up 42 percent.

Analysts wonder if the fourth-quarter sales pace, largely fueled by the cheap loan deals, can be sustained.

GM apparently will try with more incentives, offering $2,002 rebates on most 2002 models.

Ford and Chrysler officials said yesterday they are studying GM's program and will decide what, if any, incentives they will offer.

No-interest financing and rebates have proven a powerful customer draw. In January 2001, about 35.5 percent of buyers took financing deals from automakers, according to data from J.D. Power and Associates. That jumped to 72.1 percent in December.

Some observers say GM, healthiest of the Detroit automakers, is using rebates to hurt struggling Ford and Chrysler.

"I think they are taking advantage of the situation," says Tom Libby, a sales analyst for J.D.Power.