0 percent bender may bring serious sales headache in ’02

Based on the scale of the recent sales binge, many fear that the auto industry could be in for a serious hangover next year.

General Motors, for one, predicted last week that light-vehicle sales will plummet to between 14.7 million and 15.2 million units next year, from last year’s peak of 17.4 million and an expected 17 million or so this year.

Fueled by 0 percent deals, October U.S. sales surged 29.2 percent from the same month a year ago to a record 1.7 million-plus units.

That yielded a seasonally adjusted annual sales rate above 21 million units, and means sales for the year to date are down only 2.6 percent from last year’s record pace to just more than 14.5 million.

The numbers are all the more astounding when stacked up against the signs of rising unemployment, a slowing economy and skidding consumer confidence.

When the Big 3 and some import brands such as Toyota and Mitsubishi withdraw 0 percent interest incentives, many industry observers agree, sales likely will fall flat.

“It’s clear to all of us there is going to be payback from this (0 percent) program in the months ahead,” said George Pipas, a sales analyst at Ford Motor Co.

“Even extending (the offers) through Nov. 20 is not going to generate the results we saw in October. No. 1, the overall level of inventory is quite a bit lower. No. 2, there are fewer 2001 models, and the offers are somewhat less generous on the ’02s than they are on the ’01s.”

You can reach Jim Henry at autonews@crain.com

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