Big Three Automakers March Sales Decline

DETROIT April 2, 2003; John Porretto writing for the AP reports that Detroit's Big Three automakers saw sales fall 3.8 percent last month as consumers shied away from large purchases, but the declines were milder than many forecasts made before the United States went to war with Iraq.

Meanwhile, some Asian brands fared significantly better than their U.S. counterparts.

General Motors Corp., the world's largest automaker, said Tuesday its total light vehicle sales dropped 3.3 percent in March -- a month that company analyst Paul Ballew called "OK."

However, considering that many predicted a decline in sales not seen in four or five years, Ballew said the industry could find "a degree of comfort" in the results.

"Heading into this month, we certainly believed and anticipated we'd be wrestling with a lot of the anxiety we were seeing in the marketplace," he said. "It's interesting now ... how 'normal' the month turned out. It was certainly a bit stronger than most people expected."

In the past week, industry observers predicted a modest decline in sales for March, tempering some dire forecasts after a sluggish February in which harsh winter weather, economic uncertainty and global tensions hampered sales.

Operation Iraqi Freedom began two weeks ago, and analysts now say the so-called "CNN effect" -- the period during a crisis in which people remain at home watching TV coverage instead of shopping -- has been milder than anticipated.

"The events didn't keep people glued to their seats the way it did back in 1991," during the first Persian Gulf War, said David Healy, an analyst with Burnham Securities Inc.

Healy had predicted a seasonally adjusted annual sales pace of 15.8 million for March. The final tally was 16.2 million.

Ford Motor Co., the world's second-biggest automaker, said its sales fell 5 percent last month.

The company, in the midst of a five-year restructuring, said its new car volume was off 2.7 percent, while truck sales fell 5.9 percent.

Overall sales at DaimlerChrysler AG's Chrysler Group declined 3.4 percent in March. Car sales were off nearly 20 percent, while truck volume rose 2.5 percent.

"Despite the economic effects of the military conflict in the Middle East, we're still seeing car and truck shoppers in Chrysler, Jeep and Dodge dealerships," said Gary Dilts, Chrysler's senior vice president for sales.

Last month had one less selling day than March 2002.

Asian brands generally fared better than their domestic counterparts, as several companies recorded hefty gains. American Honda Motor Co., Hyundai Motor America, Subaru of America Inc. and American Suzuki Motor Corp. also posted double-digit sales growth in March.

Toyota Motor Corp., Japan's No. 1 automaker, was up 9.2 percent.

Healy said the foreign transplants, who are adding new brands and capacity in North America, "have consistently been increasing their share of the market, year over year, and I think more of that happened in March."

At the end of March, the traditional Big Three controlled 60.1 percent of the U.S. market, while Asian companies held 32.9 percent and European automakers claimed the remaining 7 percent, according to Autodata Corp.

Despite falling sales, Ford said its U.S. market share grew to 21.3 percent in the first quarter from 20.7 percent a year ago.

George Pipas, the automaker's top sales analyst, said the figure was even more impressive considering Ford has discontinued several models as part of its turnaround plan, such as the Lincoln Continental and Mercury Cougar.

For the first quarter, Ford's total vehicle sales were about flat compared with the year-ago period. Chrysler's were off about 6 percent, while GM's comparable numbers were down 9 percent.

Last year, Americans bought 16.8 million new cars and light trucks -- the fourth-best year on record.

Forecasts for total volume in 2003 have ranged from 15.9 million to nearly 17 million, though most now are in the low to mid-16 million range.

Automobile sales account for approximately 24 percent of total U.S. retail sales tracked by the Commerce Department.

Customer incentives likely will play a large role in boosting auto sales, and GM upped the ante mightily Monday by announcing five-year, no-interest loans on nearly every new vehicle except the Hummer. It applies to models, such as the Corvette, that have not always qualified for incentives.

GM originally offered incentives in an effort prop up sales after the terrorist attacks and has kept up the pressure on its competitors since.

Chrysler and Ford followed by enhancing their incentive offerings Tuesday. Several foreign manufacturers also offer incentives on vehicles.