Thu, Feb 03, 2011 - Page 6 News List

GM, Chrysler lead as US auto sales rise

TOYOTA LAGGING:Even though sales were solid last month, analysts said higher oil prices could crimp demand or send consumers scrambling toward smaller vehicles

Reuters, DETROIT

General Motors Co and Chrysler posted US sales gains of more than 20 percent for last month as the two automakers that had faced collapse in 2009 shot past the industry’s still-struggling leader, Toyota Motor Corp.

Overall US auto sales rose 17 percent, a sign that the consumer-led recovery remained on track in the US as well as in Europe and Asia, where car makers also reported a strong start to the year on Tuesday.

Strong truck sales drove GM to a 22 percent US sales gain, pushing its market share higher for the first time in six months.

Chrysler, which is laying the groundwork for an initial public offering of stock this year, saw sales rise 23 percent.

By contrast, Toyota only kept pace with the market at 17 percent, a disappointing result that showed the pressure on the top global automaker a year after a punishing series of safety recalls that tarnished its reputation.

The industry-wide sales gain last month came despite a series of winter storms that some analysts had suggested could push planned purchases into this month or beyond.

Even though sales were solid last month, analysts cautioned that higher oil prices could crimp demand or send consumers scrambling toward the smaller vehicles that remain less profitable for automakers, especially the Detroit Three.

“We’re still not at the oil prices that would tilt the industry,” said Paul Ballew, chief economist at the insurer Nationwide. “If oil prices don’t trip us up, Detroit should have a pretty good year.”

Other major automakers also posted double-digit sales gains. Honda Motor Co and Nissan Motor Co were up 15 percent. Ford Motor Co gained 13 percent.

GM’s results were boosted by a jump in sales of pickup trucks and SUVs, the heavy vehicles that remain the automaker’s most profitable offerings.

GM’s sales gain also came as it stepped up spending on incentives to lure consumers.

The automaker vowed that it would not return to its much-criticized practice of buying market share with zero-percent financing and other discounts.

In a departure from recent practice, GM declined to specify how much it had spent on sales incentives in the past month.

“We’re not going to return to the days of driving production with incentives,” GM sales chief Don Johnson told reporters and analysts. “We know that’s not going to be a recipe for success for us.”


Analysts had expected Toyota to show a bigger year-on-year gain after a massive recall a year ago cut its market share sharply.

Toyota said on Tuesday it would launch a new round of sales incentives and took steps to cut costs in its US operations — the kinds of steps Toyota’s US rivals had been forced to take before last year’s reversal of fortune for the Japanese automaker.

Toyota said it would offer zero-percent and low-interest rate financing for some models backed by a new marketing campaign around the slogan “No. 1 for a Reason” through March.

At the same time, Toyota sent an unprecedented notice to managers at its US sales headquarters in California offering buyouts to leave the payroll by April.

Toyota was the only major automaker that lost sales in the US last year. Its buyout marked the first time it had moved to cut US sales staff since it set up operations in that market in the late 1950s, a spokesman said.

“Toyota’s long-term outlook has been dimmed a bit,” IHS Automotive analyst Rebecca Lindland said. “It’s not glowing as brightly.”

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