Summer Discounts Hurt Winter Auto Sales

Analysts See 15% November Sales Drop for GM, Ford

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DETROIT ( -- Summer employee-discount sales will continue to pain domestic automakers as they start announcing November sales tomorrow.

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November drop
John Casesa, auto analyst at Merrill Lynch, predicts that both General Motors Corp. and Ford Motor Co. will see November vehicle sales drop by 15% compared to November 2004, the aftereffects of summer deals that siphoned off sales that would otherwise have occurred later in the year or even in early 2006.

Major Asian nameplates will continue to increase sales at Detroit's expense. Mr. Casesa projected a low-double-digit percentage jump for Toyota Motor Sales USA in November-over-November sales, and predicted that American Honda Motor Co. and Nissan North America will report small gains., an independent auto information Web site, forecast that GM, Ford and Chrysler Group would tally a combined November market share of 56.1%, slightly off from 56.3% in November 2004, but better than last month's record low of 52.3%.

Slow start
Car and truck sales got off to a slow start in November, but were offset by promotions later in the month from Detroit, said Jesse Toprak, executive director-industry analysis at He expects large sport utilities and truck segments to recover significantly in December due to those incentives, lower gas prices and seasonal demand for four-wheel-drive vehicles.

Todd Turner, president of consultant CarConcepts, said most automakers are in better shape now than a year ago since the summer deals generally cleared out 2005 models.

GM's Red Tag Sale
Still, automakers are dashing to 2005's finish line hoping to juice their annual numbers by advertising end-of-the-year sales. GM's "Red Tag Sale," announced earlier this month after sluggish early November results, is essentially a year-end clearance, said Mr. Turner. If the Red Tag push doesn't work, GM may be under pressure to cut production this quarter, said Mr. Casesa.

DaimlerChrysler's Mercedes-Benz USA's "Winter Event" offers special lease deals through Jan. 3 on select 2006 C-Class, E-Class, M-Class and R-Class models, according to its Web site, Mr. Turner said he's surprised there are already deals on the all-new R-Class sport wagon because the model was only launched a few months ago. Although Mercedes-Benz had planned for a relatively low sales tally for R-Class, "I don't think it launched as well as they hoped it would," he added.

Honda is heavily advertising its "Happy Honda Days," offering special lease deals on certain 2006-models, including the Ridgeline pickup, Accord car line and Pilot sport utility. Independent RPA, Santa Monica, handles.

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