Light Vehicle Sales Up in July

DETROIT Ed Garsten writing for AP said that summer marketing programs featuring no interest financing proved to be the salve to soothe consumers' concerns over uncertain financial markets, pushing U.S. light vehicle sales up nine percent last month over July 2001.

"It's almost as if consumers are using proceeds they got from selling stocks to buy cars," said David Healy, an analyst with Burnham Securities Inc.

"My guess is Wall Street people exaggerate the effect of market declines on Main Street," Healy said.

He predicted total industry sales for the year will be in the range of 17 million vehicles, which would make it one of the best in history.

Indeed, the incentive programs have the effect of overcoming what financial analysts call the "disconnect" between vacillating financial markets and their effect on consumers.

"The more important reality is that the economy is still expanding," said David Littmann, senior economist at Comerica Bank.

Together with automakers' reticence to level major price increases, incentives have made vehicles the most affordable in 25 years.

It takes an average worker about 22.5 weeks to earn enough to buy a car or truck, the least in a quarter century, according to the Comerica Bank vehicle affordability index.

Of the major automakers, General Motors Corp. led the way with a 24 percent spike in sales last month, the company reported Thursday.

"Our sales, quite simply, were terrific," Paul Ballew, GM executive director of market analysis and research, said in a conference call with securities analysts.

Sales of GM light trucks were up 36.5 percent and passenger car sales increased 11 percent over July of last year.

DaimlerChrysler AG's Chrysler Group reported a 3.4 percent decline in monthly U.S. vehicle sales compared with July 2001.

However, the automaker reported record sales for its Jeep Liberty with a 23 percent increase over July of last year.

Chrysler has resisted relying on incentives as much as GM and Ford Motor Co., preferring to showcase its seven-year/70,000 mile powertrain warranty.

"We'll continue to take a competitive and strategic approach rather than ... a nuclear approach," Gary Dilts, Chrysler senior vice president sales, said in a teleconference.

Ford Motor Co. reported its first monthly sales increase of 2002, due to a 4 percent increase in sales to retail customers.

July sales of Ford, Lincoln and Mercury brand cars and trucks were up less than 1 percent from July 2001.

Ford's top sales analyst credited in part a zero percent interest incentive program that began early in July as the catalyst for the sales increase.

"Each of the domestic brands did better this month than we did in the previous six months and that is a source of optimism on an ongoing basis," George Pipas said during a teleconference with reporters and securities analysts.

Pipas estimated that Ford's U.S. market share was nearly 21 percent, which he called encouraging, but not as large as the automaker would like.

Last month was the best ever July for Toyota Motor Sales USA. Inc. The Japanese automaker reported a 4.7 percent increase over July 2001.

"The resumption of zero-percent financing and a wide range of discounts and sweet incentives have drawn buyers back into the market," Jim Press, Toyota executive vice president and chief operating officer, said in a statement.

Sales for American Honda Motor Co. were up 7.2 percent and Nissan North America Inc. saw its sales rise 5.6 percent from July 2001.

Subaru of America Inc. reported its best July ever, despite sales dipping 3.3 percent from a year ago.

The company sold 90 more vehicles this July than last, but because there was one less sales day last year, the daily sales rate for this year is lower.

July marked the 18th consecutive record month for Hyundai Motor America, the U.S. unit of the South Korean automaker said.

Sales were up 13.3 percent last month compared with July 2001, due in large part to a 40.8 percent spike in sales for its Santa Fe sport utility vehicle.

Percentage changes are based on 26 sales days this year, and 25 last year.