Underscoring again the link between the Big 3's sales performance and their incentives spending, General Motors' sales jumped 8.1 percent in May, while Ford Motor Co. was off 0.8 percent and the Chrysler group slipped 0.4 percent.
According to CNW Marketing/Research Inc. in Bandon, Ore., GM spent an average $3,916 on incentives in May compared with $3,624 at Ford and $3,511 at Chrysler. In contrast, Honda spent $1,022 per vehicle and Nissan, $1,059.
"Ford has extremely high incentives and its sales were down, but Nissan incentives are lower and sales were up," says CNW President Art Spinella.
"Incentives help move the older stuff, but the new product is what's moving fastest," he says. "The market is getting strong on the back of new product."
GM's sales bump, coupled with stellar gains by many import brands, lifted the overall market by 4.3 percent last month to 1.58 million units, according to the Automotive News Data Center. That generated a seasonally adjusted annualized selling rate of 16.7 million vehicles in May, substantially better than the 16.0 million selling rate a year earlier and up from 16.5 million in April.
For the first five months of the year, sales are off 2.1 percent from a year earlier to 6.8 million units.
Using the daily-sales-weighted method, though, sales in May were up only 0.4 percent from a year earlier to 1.52 million units. That yields a seasonally adjusted annual rate of 16.1 million units, adjusting for one less selling day in May 2002.
With less than a month left in the first half of the year, GM and Ford already are bracing for a slowdown in the second half by scheduling production cuts to trim bloated inventories. Gary Lapidus, who follows the industry for Goldman, Sachs & Co. in New York, estimates that 3.9 million unsold cars and trucks are clogging manufacturer and dealer lots.
With 928,000 units in stock on June 1, an 82-day supply, Ford announced a 15 percent reduction in third-quarter production to 810,000 vehicles, a cut of 141,000 units. Ford said the action reflects declining fleet orders for the Ford Taurus and Mercury Sable and the launch of three vehicles: the F-150 pickup at two factories and the Ford Freestar and Mercury Monterey at a Canadian plant.
GM says it will cut its output by 6.3 percent for the third quarter to 1.2 million units. Chrysler, with a 62-day supply of 503,254 units in stock, has not announced production cuts for the third quarter.