Sales slip from October pace

But 17 million annual rate is possible in November

November chill
Key factors causing sales to slow from October's record rate


  • Low inventories

  • Less generous incentives

  • Pull-ahead from October

  • November sales are running strong but feeling the hangover of October's 0 percent financing madness as low inventories and less generous incentives keep sales below last month's record-setting pace.

    October's seasonally adjusted annual sales rate was 21 million.

    With more than a week to go before the month ends, analysts last week said sales would be at or above last November's. "But that's going to look like chump change compared with October," said George Pipas, sales analysis and reporting manager for Ford Motor Co.

    Light-vehicle sales will be an estimated 3.5 percent above the year-ago month at a seasonally adjusted annual sales rate of about 17 million, according to Scott Hill, auto industry analyst for Sanford C. Bernstein & Co. in New York. That would mean 1.28 million cars and light trucks this year.

    But David Healy, auto analyst at Burnham Securities in New York, estimates November sales will be roughly flat with November last year.

    Most of the industry will report sales Dec. 3.

    'Empty bucket'

    Pipas said Ford had only a six-day supply of its Escape sport wagon at the end of October. The Escape and the Ford Thunderbird are excluded from Ford's 0 percent incentives. "It doesn't make much sense, when you're facing that kind of inventory, to provide the same level of marketing support," Pipas said.

    Zero percent financing slimmed inventories in early November, particularly in the Northwest, said Ralph Seekins, chairman of the Ford Division National Dealer Council.

    "It's hard to sell out of an empty bucket," said Seekins, owner of Seekins Ford-Lincoln-Mercury in Fairbanks, Alaska. But dealers have restocked and sales remain brisk, he said.

    The industry had only a 45-day supply of light vehicles Nov. 1, the lowest in more than a decade.

    Ron Montague, sales manager for Don Sisk Pontiac-Buick-GMC in Indianapolis, said that 0 interest deals cleared out most 2001 models.

    "In essence, we depleted inventory that we needed to deplete, as far as Buick was concerned, with the Regal and Park Avenue," he said.

    Payback to come

    Ford, General Motors and the Chrysler group have extended their 0 percent finance deals to Dec. 31 or longer, but some of the Ford and GM offers are less generous than the ones that ended Nov. 18-20.

    For Friday, Nov. 21 through Jan. 14, Ford raised interest rates for 48-month 2002 car loans to 3.9 percent from 0.9 percent. GM had been offering deals on 2002 cars from 0 percent for 36 months to 2.9 percent for 60 months. From Nov. 19 through Jan. 2, the deal on 2002 cars is 0 percent for 36 months to 3.9 percent for 60 months. Excluded are most Cadillacs, the Chevrolet Corvette and some Saturns.

    The big payback could be on the way. Analyst Healy said since October and November have pulled ahead so many sales, "the talk around the industry is about December being the real payback month." c

    Staff Reporters Diana T. Kurylko, Dave Guilford and Mary Connelly contributed to this report

    You can reach Jim Henry at autonews@crain.com

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