Incentives Help Auto Sales

Southfield (WWJ)  -- General Motors "Employee Discount for Everybody" sale pushed car and truck sales to their highest levels of the year in August, but they were still well off the numbers we were seeing a year ago.

General Motors, for example saw it's sales rise 31 percent from July.  But that's still 20 percent below the August of 2007 rate.

"It's the first month since January that we haven't seen a decline in the seasonally adjusted annual rate," says GM sales analysis manager Mike DiGiovanni.  "It's declined every single month since January to a bottom of 12.8 million in July."

The industry's seasonally adjusted sales rate for August should be in the 14 million range.  That's a big increase from July, which was the worst sales month in 16 years.  Still, it's significantly less than the 16 million sales rate that the industry saw through most of 2007.

General Motors Wednesday extended its Employee Discount sale through the end of September.  In the past, big incentives have only pulled ahead sales that would have been made a few months later, meaning big sales drops once the deals were done. GM's DiGiovanni doesn't expect that to happen this time.

"That's really been our strategy to try to jump start it this month, knowing that there is the possibility for pull ahead, but knowing as the economy strengthens, we can mitigate it just by consumer demand picking up," said DiGiovanni.

Not all analysts see it the same way.  Ford is cutting 50 thousand vehicles from its second half production, as it anticipates weaker sales ahead.

"We're in a very volatile period here, largely influenced by GM incentive programs," said Ford analyst George Pipas.

Ford's sales were down slightly from July, and off 26 percent from last year.  Sales of the Focus small car were up, as were sales of the company's updated small SUV, the Escape.  Most other Ford products, particularly trucks, had a rough month.

"The economic conditions and the consumer credit crunch that are resulting in these depressed levels of sales are likely to persist, at least into the end of this year or next year," said Pipas.

Chrysler saw its sales off 34 percent from last year.  But that was still a 12 percent improvement from July.  Chrysler announcing that it's continuing with its "Shop till You Drive" incentive campaign.

Import brands reported mixed results.  Toyota sales are down nine percent from last year.  Honda was also off, but both Nissan and Kia reported very healthy sales increases in August. 

It's hard to determine the impact that slightly reduced gasoline prices had on the economy.  Ford's George Pipas says if those prices stay down, it could have a positive impact of sixty billion dollars on the economy.

"Sixty billion dollars into the pocket of consumers is about half of what the economic stimulus checks were."