DETROIT -- The frosty weather did little to cool new U.S. car and truck sales, which are expected to have risen at an annual rate of 4.5 percent in January as the strengthening economy and high incentives kept sales brisk.
"The storm the last couple of days set us back a little. But we had a good 10 days prior to that, so hopefully we're going to have a good month," said Jim Frageau, general manager of Crowley Chevrolet-Hummer in West Hartford, Conn.
Analysts generally expect January sales to rise to a seasonally-adjusted annual rate of 16.7 million to 16.9 million vehicles in January, up from 16.1 million in January last year, according to a Reuters survey of eight analysts.
Actual sales could be stronger than 4.5 percent, as the annual figure is adjusted for an extra selling day in January this year compared with last year.
Sales usually soften in January from December, when automakers add incentives to try to reach annual sales goals, and this year is no exception. December sales hit an annual rate of 17.9 million, the strongest of 2003.
"Everything we're hearing from Detroit leads us to believe that we're going to have a pretty strong year and a pretty strong month," said Peter Glassman, a senior economist with Bank One Corp.
The economic recovery and employment gains, coupled with continued high incentives and low interest rates fueled vehicle sales in January, analysts said. Automakers are scheduled to release U.S. sales results on Tuesday.
FORD SHAVES INCENTIVES
Sales incentives, for the most part, have remained high this year, despite hopes by some automakers that they could cut back spending.
"The 'better pricing in '04 story' is turning out to be a work of fiction, as expected," Goldman Sachs analyst Gary Lapidus said in a report.
But Ford Motor Co. has in recent months scaled back incentives, even while rival General Motors continued to offer enticing deals.
"Ford has apparently made a strategic decision to sacrifice market share for the sake of profitability," said analyst David Healy of Burnham Securities.
Healy expects Ford sales to fall about 5 percent from January of last year, when it tallied one of its strongest market shares of any month in 2003.
Ford has scaled back on some sales to low-margin daily rental businesses but still offers sales incentives of as much as $3,500 a vehicle.
GM sales are expected to rise sharply from January last year, when the automaker had one of the weakest months of 2003. Pledging to make a "fast start in '04," GM boosted dealership traffic this month with its "Hot Button" giveaway of 1,000 cars through the end of February.
Frageau said hundreds of people had visited his Connecticut dealership to play GM's $50 million "Hot Button" promotion, but many only pushed the button and left the store.
Chrysler sales are expected to rise slightly in January, but that may not be enough for the Chrysler group to beat Toyota Motor Corp., some analysts said.
Toyota's sales could top the three Chrysler group brands -- Chrysler, Dodge and Jeep -- for the second time in January, Lapidus said. Toyota's combined sales from its Toyota, Lexus and Scion brands topped the Chrysler group for the first time in August last year.
Foreign automakers are generally expected to post stronger earnings and continue their trend of taking market share away from their U.S. competitors, analysts said.