Don't Thank Marketing for GM's 22% Sales Rise

Analysts Say Comparing Auto Numbers to Those of 2005 Slump Skews Results

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You might be tempted to look at General Motors Corp.'s 22% October sales jump and declare it a victory. Don't.
'It's like comparing apples to oranges,' said Todd Turner, president of consultant CarConcepts.'
'It's like comparing apples to oranges,' said Todd Turner, president of consultant CarConcepts.' Credit: AP

Experts cautioned that comparing last month to October 2005 is an unbalanced proposition since both GM and Ford Motor Co., which posted an 8% gain in the period this year, slumped badly a year ago coming off their summer of employee discounts. "It's like comparing apples to oranges," said Todd Turner, president of consultant CarConcepts. And they aren't crediting GM's marketing for the rise.

Paul Ballew, exec director-global market and industry analysis at GM, said its October truck sales have been helped by the headwinds of lower gas prices and interest rates. GM reported a 38.5% jump in its light-truck sales compared to October 2005. and sold 184,930 units in the category last month. Still, for the first 10 months of 2006, GM's U.S. light-truck sales (1.2 million units) are off by 10%.

Charlie Hughes, president of consultant BrandRules and a former auto executive, doesn't believe that GM's vehicle warranty, beefed up in September and backed with a widely-praised blitz dubbed "Elevate" from Deutsch, Los Angeles, is having a big influence on sales. Mr. Turner agreed, saying it probably reinforced buyers who were already predisposed to buy GM products.

Each carmaker has its own unique situation, and a one-month snapshot is not the best gauge of performance, said Jim Hall, a VP at consultant AutoPacific. Chrysler Group, whose sales fell 3% in October vs. last year, is still grappling with too many 2006 models. And in fact its only all-new truck model is the Chrysler Aspen SUV, which is competing against its own unsold 2006 models, including sibling Dodge Durango, said John Bulcroft, president of Advisory Group.

To help clear out 2006 models, Chrysler advertised 0% financing for 60 months last month. Mike Manly, VP-sales strategy and dealer operations, said the move boosted showroom traffic and sales of 2006 models in the last two weeks of October and will repeat the strategy in November.

Chrysler's inventory glut comes despite big incentives. Edmonds.com reports that Jeep spent the most on incentives industry-wide-$5,763-and Jeep and Dodge spent the most on incentives in October relative to their sticker prices: 20.7% for Jeep and 13.7% for Dodge.

Steve Landry, VP-sales and field operations at Chrysler Group, said the automaker's dealer inventory stood at 508,724 units at the end of October, with 418,656 trucks and 90,068 cars. He said 45% of the automaker's inventory mix last month was 2006 models and 55% was 2007 models. For the month, Chrysler Group sold 55% of its 2006 models and 45% of its 2007 models.
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