November sales that were on par with a year ago have analysts expecting more incentives for December and production cutbacks in the first quarter of 2005.
Automakers will report November sales on Wednesday.
Four analysts all expect sales for the month to total around 1.3 million units, which equals an annual selling rate of about 16.5 million units. Sales in November 2003 totaled 1.26 million units.
But a first look at Ford Motor Co.'s and General Motors' production schedules for the first three months of next year is certain to attract as much attention as the November sales results.
Ford and GM are likely to cut production in the first quarter of next year by 5 to 7 percent from the first quarter of 2004, notes Christopher Ceraso of Credit Suisse First Boston in a report issued Monday. GM has already said it plans to close five assembly plants the first week of January -- all but one of them truck plants -- to reduce inventories.
The culprit: Higher-than-normal inventories. Merrill Lynch & Co. analyst John Casesa estimates that vehicle inventories at the end of November will be 13 percent higher than the five-year average.
Several analysts expect GM to see its November sales drop about 5 percent from a year ago. But GM saw its sales soar 17.4 percent in November 2003, propelled by incentive spending that averaged $4,400 per vehicle, according to CNW Marketing /Research Inc. of Bandon, Ore.
Casesa expects GM to pour on the incentives in December for two reasons:
Analysts expect Ford Motor Co.'s sales to be down slightly for November, as it starts to reap the sales benefits of new products such as the Five Hundred sedan and Mustang coupe. Chrysler group's sales are expected to be up from 2 to 4 percent on the strength of the Chrysler 300 and Dodge Magnum cars.
Import automakers, as a group, are expected to see sales increase by 2-3 percent from a year ago, driven primarily by Toyota and Nissan.
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