October sales prove a fright

By Published on .

The U.S. auto industry got kicked in the gut in October, suffering its worst sales since 1992.

Higher interest rates, volatile gas prices, less-generous incentives and the void left by the end of employee-discount promotions contributed to Detroit's decline, said Jim Sanfilippo, exec VP of Omnicom Group auto consultancy AMCI: "Consumers are in their bunkers."

Toyota Motor Sales USA's retail sales outpaced those of General Motors Corp., said Maryann Keller, a former auto analyst now with her own consulting firm. GM's total market share in October was 22%, but 40% of that, or 8.8% of the share, was fleet sales. "That means GM's retail share in October was a dismal 13.4%," she said. Toyota had a 15.1% market share for the month and does very little in fleet sales.

The industry averaged October incentives of $2,204 per unit, 15% less generous than September, according to Autodata Corp. John Casesa, auto analyst at Merrill Lynch, expects incentives to increase this month.

GM, usually the most generous with incentives, pulled back, lowering overall incentives by nearly $1,000 per vehicle. Its October sales skidded by 23% from October 2004, to 247,623 units. Ford Motor Co. sales dropped 26% for the month, while Chrysler Group sales were down 1%.

Volkswagen of America, Nissan North America's Nissan and Infiniti brands, Hyundai Motor America and affiliate Kia all saw declines.

Toyota Motor's Toyota and Lexus brands rose, as did sales at Mitsubishi Motors North America. American Honda Motor Co.'s Honda brand eked out a 0.8% increase, but its Acura brand declined by 2%.

Ms. Keller doesn't expect car and truck sales to grow in 2006, citing "a drag on consumer income from higher interest rates."

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